Proptech Investment Tumbled 80% Last Quarter From 2022 Peak: Report

Venture capital firms appeared more and more tepid on proptech investments in recent months, as the sector’s meteoric growth in recent years continues to subside.

Total venture capital investment in proptech hit just below $1.5 billion during the first quarter of this year, a 12 percent year-over-year decrease from the first quarter of 2023 and a nearly 80 percent dip from the first quarter of 2022, when investments in the sector peaked at $7.4 billion, according to a new report from the Center for Real Estate Technology & Innovation (CRETI). 

The chillier investing environment is likely due to a combination of uncertainty in the global economy and company re-evaluations, the report noted. The space was already on the ropes after it saw some of the lowest funding totals in the first half of 2023 thanks to rising interest rates tightening the flow of money, though things picked up in the second half of the year. 

Weekly funding figures were also quite volatile in the first quarter, ranging from just $15 million in week one to $254 million in week six, reflecting bursts of investing activity rather than a consistent flow of capital. 

Investors also clearly preferred early-stage funding for proptech startups throughout the quarter, with seed funding taking the largest share of the pie at 30.6 percent, followed by venture rounds at 23.1 percent, according to the report. The CRETI report suggests that, despite the sluggish first quarter, proptech is still ripe for investments, particularly in young, innovative companies.

Investors favored certain companies perceived as market leaders and innovators, such as Sunbit, a financing platform for unexpected personal expenses, and travel loyalty program Bilt Rewards, which took home $310 million and $200 million, respectively.

“Q1 2024’s proptech venture capital landscape exhibits a cautious, yet strategic, investment approach, with significant funds allocated to promising areas despite the overall decrease in total capital,” CRETI Managing Director Ashkán Zandieh said in a statement. “This indicates a market where investors are more judicious, seeking to balance risk and reward in a sector experiencing dynamic changes.”

Nick Trombola can be reached at ntrombola@commercialobserver.com.