May 24, 2022

Is the Proptech Investment Bubble About to Bust?

A very interesting article in The Times on Sunday 22nd May, titled “Buckle up for the Great Revaluation” had me thinking about the Proptech world. 


The article by Danny Fortson explains “Chaos” does not overstate the troubles of the tech market, which has gone into meltdown to an extent not seen since the dotcom crash of 2000”. 


The article explains the Nasdaq has dropped a third since November, venture capitalists have “closed their wallets” and amusingly refers to a comment from Marc Andreessen that “start-up founders had, apparently, not yet got the memo that the world had changed”. 


The Nasdaq plummeted in the dotcom crash, and reports show that trillions of dollars have already been wiped out recently from the value of tech shares. 


So, what of the Proptech world? 


From my involvement in this space, it seems logical that the Proptech investment bubble is certainly stretching, if not bursting.  I have attended many Proptech events and witnessed with caution the excitement.  I watched the huge hype when blockchain came on the scene – in my clicktopurchase business we started to use blockchain for its true benefits as far back as 2017, and still do!  Shortly afterwards, I had consultancies offering to “float” us on the Gibraltar ICO market where I was told I would make a fortune, and they were only going to charge me £300,000 for the privilege, plus just take 25% of the fund raise – we declined their kind offer.  Since, I have seen many supposedly blockchain-based businesses close, despite the promises to their investors. 


If you look at the large firms, JLL created the “JLL Spark Global Venture Fund” to invest substantially into early-stage Proptech companies, last year Knight Frank was reported to have invested in Fifth Wall’s €100m European Real Estate Technology Fund, recently CBRE were reported to have invested in Fifth Wall’s Climate Technology Fund, etc.  Where these the correct calls? 


Doesn’t it feel as if companies have followed the crowd upwards and will now be somewhat worried about their positions? If I can suggest, the issue with many Proptech ideas is that they are seeking to solve problems which do not exist. 


There will be true winners within the Proptech space although it may take some time for their valuations to climb again. 


What do you think? 


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