Dallas’ Proptech Scene Is Coming for Austin — and Maybe Everywhere Else

Corporate real estate powerhouses such as Trammell Crow Company, CBRE, Transwestern and more have deep roots in Dallas, creating a marketplace that has attracted proptech startups at a growing rate since COVID caused many companies and individuals to migrate to the region, experts said.

Since 2020, 17 proptech-related companies have made their headquarters in Dallas, according to Ashkán Zandieh, managing partner and industry chair at the Center for Real Estate Technology and Innovation (CRETI), which itself moved from New York City to Dallas during the pandemic.

“Since then, $2.3 billion has been invested in equity rounds in proptech companies, with $450 million invested in Dallas-Fort Worth-based proptech companies, and $860 million invested in Austin-based proptech companies,” said Zandieh. 

Included in those investments is $43 million invested in CrowdStreet, an Austin-based commercial real estate investing platform; $20 million in TestFit, a Dallas-based site planning software company; and $15 million in Austin-based Setpoint, a warehouse securitization management platform, he added. In addition, since 2020, 47 percent of Dallas-Fort Worth-based proptech companies have raised a pre-seed round, while 24 percent went to seed stage rounds, said Zandieh.

Among the proptech startups attracted to Dallas is VERO, a rental management platform that seeks to eliminate application fraud and to streamline leasing, said Lou Baugier, founder and CEO, who is quite happy with his location choice.

“The Austin scene is much more engineering-heavy, meaning it has a lot of technologists concentrated in what was a small town,” said Baugier. “Dallas is a much more balanced community in terms of industries, with folks in oil and gas, finance, startups and a lot of folks in real estate. A lot of the people that I interface with are in real estate and in technology. I think the combination of both is the difference between Dallas and Austin. You don’t have as big a real estate community in Austin.”

VERO started in New York City in 2018, and relocated in 2021.

“The move not only met, but exceeded, expectations,” said Baugier. “We have fundamentally changed our business as a result of moving to Dallas, in the context of knowing what to build for the broader United States, as opposed to building a product that is New York-specific. It is a very easy trap for startup or product companies to fall into New York-specific problems that do not apply to the rest of the country. If you’re in Dallas, you’re likely building a solution to better cater to broader U.S. market needs.”

RE Analytics, which abstracts real estate cash flow documents, is another Dallas-based startup that is benefiting from the region’s real estate market, said George Burchlaw, founder and principal of the company.

“I’m from Pittsburgh, but I went to the University of Texas-Austin for business school, graduated in 2000, and took my first job at a private equity shop in downtown Dallas,” said Burchlaw. “Austin was great for tech, but maybe not for real estate. I wanted to get into real estate, and Dallas was the city to be in.

“We don’t really recruit technical people. We are more of a real estate company with a technology platform. So basically that’s why we’re here. There’s so much real estate talent here with analysts that there’s probably no shortage of an employment base for our company.”

A longtime Texan, Matthew DeSarno, a former FBI special agent and head of the FBI’s Dallas office, is CEO at Verfico Technology, a Dallas-based wage assurance company focused on the construction industry.

“Last year $50 billion in wages were stolen from American workers,” said DeSarno. “Verfico prevents wage theft and levels the playing field by shining a light on fraud, theft and cheating in labor markets. It’s like insurance for the uninsurable risk of wage theft. We verify that the last-mile delivery of the dollar you’re investing in your projects makes it to the workers who build your success.”

Founded in November 2022, Verfico has been selling to general contractors and subcontractors since 2023, gaining traction in the market, said DeSarno. “It’s a spectacular place to start a business because it’s growing like crazy. There’s a lot of money here. The technology hub of Texas has always been Austin, but Dallas has grown so much. Real estate is a major industry here and there have been lots of good proptech companies born out of here. We’re kind of bootstrapped a little bit, but there are plenty of venture opportunities that are local. It’s not just New York and San Francisco for that.”

One of those proptech-focused venture capital firms headquartered in Dallas is LPC Ventures, a division of Lincoln Property Company, said Vince Cicciarelli, a partner and vice president of innovation and venture at LPC, who oversees emerging technologies for Lincoln Property’s platform. LPC also looks to invest in early-stage technology and venture deals.

Having started in January 2019, LPC is by no means alone in offering Texas proptech entrepreneurs funding, said Cicciarelli.

“I do see more and more groups in Dallas regularly involved in conversations in proptech fundraising rounds, and more as advisers in different capacities,” he said. “That’s become a lot more prevalent in the last couple of years. I’d still say the majority of deals and activity are still coming from the West Coast, but more and more I hear of a group that moved to Austin during COVID and now have relocated and have a presence in Dallas for a variety of reasons — including the infrastructure, stakeholders and decision-makers that are here, as well as the connectivity between the West Coast and East Coast that is Dallas.”

The availability of numerous real estate clients and funding has proved fertile ground for successful Dallas-based proptech startups such as Dottid, a management workflow platform for commercial real estate teams, portfolios and data, and ParkHub, a parking technology software company.

However, the networking and support necessary for nascent proptech companies is still being built in Dallas, said Matt Newville, vice president of growth at RealtyAds, a Chicago-based, AI-powered CRE advertising platform for brokers and tenants that has a major presence in Dallas.

“Right now, there’s not a strong community around collaboration and innovation,” said Newville. “I think a lot of the proptech companies that have started up in Dallas have been siloed behind work from home models, and they’re all running around going to conferences and having to fly across the country to go sit on panels and talk about ideas. But the community in Dallas after COVID has seen a lot of family offices that have moved here, and a lot of capital. A lot of innovation engineering coders now centrally live in Texas and in Dallas.

“Along with Vince [LPC Ventures’ Cicciarelli], our vision is that we are creating a community where innovators, VCs and owners can meet and talk once a month about what they’re seeing in the market, what’s working, what’s not working. We’re creating that space because right now it just doesn’t exist in Dallas. And so the only reason we’re creating that is because most innovation is happening behind email and not in person in Dallas.”

Another aspiring proptech connector in Dallas is Caroline Frith, CEO and founder of Banksia Advisory, a technology consulting business for commercial real estate founded earlier in April.

Originally from Australia, and for a number of years a New York City resident, Frith has become a fervent advocate for Dallas.

“I think that it has probably overtaken Austin, yet Austin is still a sexy place for technology startups,” said Frith. “However, there’s a lot of equity in Dallas. It’s a growth market in terms of there being demand for office space and demand for multifamily.

“I’m located in Preston Center, which is like an uptown area of Dallas. It’s like a mini-CBD concentration and there are three or four proptech firms right here within walking distance from me. So I definitely feel like Dallas is going to be a formidable competitor with Austin pretty soon.”

Philip Russo can be reached at prusso@commercialobserver.com.