5 Questions With MetaProp’s Aaron Block at MIPIM
Proptech was out in full force at MIPIM 2023.
The event, held again this week at the Palais des Festivals in Cannes, France, had a huge amount of floor space dedicated solely to proptech with different companies showcasing their wares, and countries around the world — including Hungary, Norway and, obviously, France — promoting the innovation happening within their borders.
“One of the trends that I think will actually continue over the next couple of years is the globalization of proptech, the cross-border nature,” said Aaron Block, co-founder of New York City-based proptech venture capital firm MetaProp, who was in attendance at MIPIM again this year.
Commercial Observer sat down with Block near the convention floor to discuss the current state of proptech and what he’s been seeing at the convention.
This interview has been edited for length and clarity.
What are some of the main differences between the proptech scene here in Europe and the one in the United States?
There’s a lot of multi-generational family businesses here. They don’t get the big headlines, but the vast majority of those folks seem really innovative relative to the folks in the U.S. The midsized, super-regional construction companies and stuff like that are getting into all sorts of modular, prefabricated, manufactured housing and utilizing new technologies. And, in addition to their core businesses, they’re starting proptech companies in a way that I would have expected to be more American and entrepreneurial.
I had an event yesterday with 30 CEOs, and it was remarkable. Maybe 10 percent of them had tech startups that they were building in addition to their core businesses.
What is it that makes Europeans decide to not only invest in proptech, but also start their own companies?
The innovation ecosystems in Romania or Portugal — even the U.K. to a certain extent — are less developed than in the U.S. There’s Silicon Valley and the East Coast of the U.S. and then there’s kind of everything else. And everything else is a far, far cry from what we have. When you don’t have as much innovation locally, you have to create. That’s a pattern that we’re going to see more and more, especially around ESG.
I think that’s going to position some of these European firms ahead of their U.S. peers in a generation. It’s going to take 10, 15, 20 years, but by the time their children are in the business and it’s fifth generation, they’re going to be flying a lot faster than their peers in the U.S.
There’s a lot of innovators here now, but frequently you see some technologies that are similar to what we have in the U.S. but a few years behind what was developing in the U.S. That’s very common in my travels. That’s what I see frequently. I see Europe maybe three or four years behind the U.S., and sometimes the Asian startups are a couple of years behind the Europeans from the innovation perspective.
You mentioned ESG before. There’s been talk about a lack of ESG data for building owners. Do you think the market is lacking sophisticated ESG technology?
Something like 56 percent of investors are looking for ESG proptech solutions and only 5 percent of entrepreneurs are fielding ESG-oriented solutions, which is a huge disconnect. We hope to have a part in filling that void that exists because I don’t think demand will suddenly evaporate. It’s only going to get worse; the regulators are squeezing more.
The low-hanging fruit is getting picked once you’re past the data and reporting stuff — which everybody’s complaining about now on every panel — but that stuff is going to be solved in the next 18 months. Where’s the next wave of solutions going to be? Is it going to be in building materials? Is it energy, water and waste? Those are the big three areas where we’re going to see new innovations coming.
What other trends are you seeing for the future?
The globalization trend. There’s a sense that that will only continue. I think construction tech is a big one. Construction is where the supply chain and manufacturing process is very inefficient and carbon-consuming, so I think there’s going to be a lot of additional innovation in that. And it’s very local — everybody touches and feels construction in every market — so there’s a lot of opportunity for piloting and testing proof of concepts.
Early on in the pandemic, there was huge interest in proptech firms gearing up for the return to office, but that hasn’t happened fully in the U.S. Has that been a trend that has fallen out of favor?
I think when everybody’s hysterical, it’s a good time to slow down. And everyone was hysterical at that point and suggested that we invest in thermal scanning technology and air-purification technology. A lot of it was hardware oriented, and that’s just a tough way to make a buck in venture capital. I think we were just naturally suspicious and patient to see how it played out before jumping into something that was economically a hard pill to swallow. I think that’s served us well.
I don’t think that these were necessarily bad businesses as these new technologies were coming out — I bet you they did OK and may still be doing OK — but they weren’t venture-backable businesses.
Nicholas Rizzi can be reached at firstname.lastname@example.org.