Proptech Under Trump 2.0: More VC and M&A Activity

While such speculation by the greater business community is normally freely expressed before and after elections, almost all the proptech investors and entrepreneurs queried for this article about what might happen post-election were reluctant to offer any opinions on — or even off — the record. The traditional businessperson’s reluctance to appear partisan, and possibly offend existing or potential customers, seemed more firmly in place than ever.

Last week, however, Bradley Tusk, co-founder and managing partner of Manhattan-based early stage technology venture capital firm Tusk Ventures Partners, was less reluctant to offer his thoughts on what investors and entrepreneurs might expect from Trump administration policies toward business, as well as the limits of federal regulation. 

“The vast, vast majority of tech regulation occurs at the state and municipal level, not the federal level,” said Tusk, speaking to the limited partners at early-stage venture capital firm MetaProp’s annual general meeting in Manhattan. “Everyone thinks of Washington when they think about politics, but most of your agenda is state-based, and almost everything real estate dependent is state- and local-based. So, generally speaking, less [federal impact] than people might expect.

“I think there are some sectors that will benefit and then some that might have more challenges. Fintech has been treated really harshly under the current SEC [Securities and Exchange Commission], crypto even worse. Clearly, there will be a different regulatory framework for crypto, and, more generally, more friendliness towards innovation and AI in fintech, broadly.”

Tusk also sees a possible change in the direction of the Federal Trade Commission and its attitude toward mergers and acquisitions.

“From a macro standpoint, I think because the FTC has been so anti-M&A — and you can debate whether or not going after Big Tech is pro-innovation or not, I actually believe it is — but nonetheless it ended up having this chilling effect across the board,” he said. “Venture as a whole requires liquidity. Venture capitalists, you know, we’re not here for the good of humanity. We’re here to make money for our LPs and for ourselves, and people only give us money to invest when we’re returning capital to them. And there’s been effectively no liquidity in the venture market at all for the last three-plus years, in part because the IPO market had been dead, but in large part because most exits are not IPOs. Most exits are M&A, and there just hasn’t been any at all. That will open up quite a bit, I think, so that’s pretty good.”

Tusk’s remarks came in a one-on-one conversation with Julie Samuels, president and CEO of Tech:NYC, a Manhattan-based technology support network. In the conversation, Samuels pointed out that while Tusk said it was most likely that potential Trump administration policies would be “directional and atmospheric,” they could have state and local impact as well.

“I do think the atmospherics from the federal level really matter at the state and local level, and particularly in blue states like New York or California,” said Samuels. “For instance, I think we see our state legislators respond to what’s happening at the federal level. I’m not quite ready to make a prediction exactly how that’s going to go, but I have no doubt that a lot of local legislators here are trying to figure out how best to be anti-Trump in this moment. And I think there’s a world in which it could look like they come after tech in Albany or in Sacramento, or wherever, but it’s not for sure.”

Admitting that he might be “probably naively hopeful and optimistic and maybe not,” Tusk added that a Trump administration Department of Housing and Urban Development (HUD) could be better positioned to advance a lot of reforms in permitting for affordable housing creation and construction in general. That’s because, unlike a Democratic administration, it would be  less wedded to organized labor.

“While most of these rules are local, they’re adjacent,” Tusk said. “For example, the way that the drinking age across the country was raised to 21 was that federal highway funds were not distributed to any state that didn’t have that age. I think you can do things like that with HUD funding. You can try something like Race to the Top in education, for HUD.

“I do think that if we wanted to try to be positive, there’s a world now of politicians on both sides of the aisle that say the rules we have put in place around construction — prevailing wage, permitting, environmental impact, community input, all of that — is suffocating affordable housing and development completely,” Tusk added. “Perhaps now there is a pathway for the different levels of government to try to work together and do something good.”

A more proptech-specific outlook was offered by Matt Newville, vice president of growth at RealtyAds, a Dallas-based commercial real estate advertising platform that uses AI in its work with brokers and tenants.

“New capital is ready to be deployed after a holding pattern for the past 16 months,” Newville said in an email. “In Q3 2024 alone, almost $2 billion was deployed for proptech companies. And vice president of sales roles for hire have increased by 17 percent in the past week on LinkedIn, showing signs of revenue roles ramping up.

“The stock markets have already seen a strong response to the Trump administration and the election,” he added. “I believe this will open up the M&A markets and the capital that has been on the sideline will be deployed.”

Newville was also optimistic that Republican-led tax cuts and increased spending would not lead to even higher interest or mortgage rates. “Over the past three presidential changes, in the first 100 days we have seen that CRE responds well,” he said.

Two proptech entrepreneurs who asked not to be named offered comments on possible Trump administration policies that could affect their businesses, but they mostly agreed everyone is in a “wait and see” moment.

An electric vehicle-charging company manager was unsure whether Tesla co-founder and CEO Elon Musk could use his relationship with Trump to get the incoming president to abandon his “drill baby drill” fossil fuel campaign promises in favor of greater administration support for EVs.

Taking a broader view, one highly regarded proptech CEO said that they expected Trump to cut regulations and taxes, which could help open up the real estate market. However, the executive added that the new administration’s policies toward resolving the huge challenge of fixing the affordable and overall housing market crisis was unclear at best.

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