US companies have driven investment activity in the PropTech subsector globally since 2014

Investors have poured $9.5bn into PropTech companies globally since 2014 with over $1.1bn raised in H1 2019

  • Rising real estate prices in most major advanced urban centres since 2009 has led to the emergence of new startups looking to digitally transform traditional real estate business model. Further insights from KMPG identified an industry consensus regarding the need for traditional real estate organizations to engage with PropTech companies in order to adapt to the changing global environment.
  • FinTech investors injected just over $9.5bn into PropTech companies globally between 2014 and H1 2019, with almost 900 transactions completed during the period. Investment grew at a CAGR of 53.6% between 2014 and 2018, with the average transaction size increasing from $3.4m to $20.5m during the period.
  • Funding in the first six months of the year reached almost $1.2bn across 51 deals, which increased the average deal size to $23.3m during the period. The proportion of investment in H1 2019 coming from deals valued at $100m and above stood at 58.9% of the capital raised, which is above the 47.1% average share between 2014 and H1 2019.

 

Investors in North America have been the most active PropTech backers globally since 2014

  • There were 867 PropTech deals completed globally between 2014 and H1 2019, with investments made right across the value chain covering property investment platforms, online agents and brokers, companies that provide lending services, profiles and listings and property valuation tools.
  • Investors based in the US have been some of the most active investors in the subsector since 2014, with seven investors listed in the top 10.
  • Khosla Ventures is a venture capital firm, based in Silicon Valley, with over $5bn of assets under management. The firm has been the most active PropTech investor globally since 2014, having completed 11 transactions. Khosla venture’s largest deal was the $325m Series E round raised by OpenDoor, an online home purchase platform, in Q2 2018.
  • Y combinator has been the most active accelerator globally, completing 10 deals between 2014 and H1 2019. Other accelerators include 500 Startups and Seedcamp which have both completed eight transactions.
  • Kima Ventures is the only French investor listed in the top 10, having also completed eight PropTech deals between 2014 and H1 2019. The venture capital firm most recently invested in a $2m seed round raised by Landis, an online selling and buying platform helping renters become homeowners based in New York.

 

Companies based in North America have captured almost 60% of all PropTech deal activity over the past five and a half years

  • Companies based in North America captured 59.6% of all deal activity in the PropTech subsector between 2014 and the first half of the year, with 94.6% of these transactions involving companies in the US. Investors such as Softbank are still bullish on the PropTech landscape in the US, given that real estate is the biggest asset class in the country, and the largest transaction in people’s lives, but its digital transformation is still only beginning.
  • Companies such as Knock, which is a home trade in platform, are at the forefront of this digital transformation. The New York-based company raised a $400m Series B round in January 2019 to continue its nationwide expansion and further develop its proprietary technology. This funding, led by Foundry Group was the largest PropTech deal of H1 2019.
  • Europe has been home to more than a quarter of all PropTech deals since 2014 and companies based in the UK being the real driving force in the region, with PropTechs in London capturing half of all deals in the region since 2014. London is one of the key commercial property centres of the world and is supported by initiative such as the UK PropTech Association which is driving the digital transformation agenda within the property industry.
  • Despite involvement in just 8.4% of deals globally, Asian PropTech companies have captured 21.8% of the total capital raised in the subsector globally since 2014, with at an average deal size of $28.4m. According to research by JLL, the PropTech market in the region, heavily driven by China, has significant barriers to entry and as such, companies need to be extremely well capitalised in order to penetrate it.

 

US and Chinese companies dominate the list of largest PropTech deals globally since 2014

  • More than $3.6bn was raised in the ten largest PropTech deals between 2014 and H1 2019, which is equal to 37.8% of the total capital invested in companies in the subsector during that period.
  • Lianjia is a digital real estate services platform based in Beijing, covering residential property sales, leasing and decorative service across mainland China. The company raised $594.2m in a Series B round in Q2 2016, led by Huasheng Capital with participation from Baidu and Tencent Holdings. This was the largest PropTech deal to date and the company now has over 120,000 brokers on its platform and is valued at more than $6bn.
  • Opendoor is a digital home selling service that can value a property and provide sellers with a quote for an all cash offer, eliminating the hassles of listings and property chains. The company, which is based in San Francisco, has been involved in three of the largest PropTech deals since 2014 and has raised $1.5bn since its founding. OpenDoor raised $400m in a Series E round from SoftBank Vision Fund in Q3 2018, which was the joint third largest PropTech deal globally between 2014 and H1 2019.

 

The data for this research was taken from the FinTech Global database. More in-depth data and analytics on investments and companies across all FinTech sectors and regions around the world are available to subscribers of FinTech Global. ©2019 FinTech Global

Enjoying the stories?

Subscribe to our daily FinTech newsletter and get the latest industry news & research

Investors

The following investor(s) were tagged in this article.