Global PropTech investment slowed last year as large deals in Asia dried up

PropTech investment fell by almost 30% last year, following a strong 2016 driven by late-stage deals taking place in China

  • PropTech deal activity increased from 127 deals in 2014 to 162 in 2015, with funding surging almost 2.5x to nearly $1.4bn. This growth was partly driven by larger deals such as the $223m series C round that FangDD, a Chinese online real estate broker platform, raised from FountainVest Partners in Q4.
  • Despite a dip in activity to 147 deals, PropTech funding almost doubled to over $2.6bn in 2016. This huge growth in funding was driven by a slew of larger funding rounds, with four deals valued above $200m. Home Link (Lianjiia), a Chinese online estate agent platform, raised $594.2m in  Series B funding led by Huasheng Capital. This investment was the largest PropTech deal of 2016 and the capital was raised to fund future acquisitions.
  • In 2017 PropTech deal activity declined again to 140 deals, with funding down by almost a quarter to $1.9bn. Although investors did fewer PropTech later-stage deals last year than in 2016, there were still some large transactions completed. In Q4 Compass, a New York-based online real estate platform, raised $450m in series E funding led by SoftBank. This was equal to 23.5% of the total capital raised across the entire sector in 2017. Compass plans to use this capital injection to fund expansion into markets outside of the US.

Global PropTech investment surged in Q4 2017, driven by larger deals

  • PropTech deal flow has been growing consistently since Q4 2016, doubling to 48 deals in the final quarter of last year.
  • Q4 2017 investment more than trebled to over $1bn compared to the previous quarter. This was due to investors engaging in a greater number of larger transactions. London-based Nested, an online real estate sales platform, raised $47.4m in Series B funding from Pincus Capital and Global Founders Capital in one of the biggest equity deals last year.
  • The year ended strongly with growing deal activity and investment, setting high expectations for 2018 as companies look to raise capital to fund expansion.

North America and Europe have dominated PropTech deal activity over the past four years

  • North America’s share of global PropTech deal activity has been falling year-on-year but it remains the most dominant region, with companies in the region taking almost half all deals globally in 2017. Of this, US companies accounted for 95.7% of all deals in the region last year. One of the largest North American deals last year was the $50m Series D round that Boston-based Placester, an online real estate marketing platform, raised from New Enterprise Associates in Q2.
  • Europe has trailed North America since 2014 but its share of PropTech deal activity has been growing consistently, reaching 37.1% in 2017. The UK was the top destination for deal flow in Europe, representing almost 60% of the continent’s deal activity. Europe’s largest deal last year was the $65.4m debt financing that LendInvest, a London-based property finance platform, raised in Q3.
  • The rest of the world includes Africa, Australasia and South America. African companies were not involved in any PropTech deals in 2017 and the last deal on the continent was the undisclosed debt funding that Landmark Africa, a Nigerian serviced office platform, raised from Vantage Capital in Q2 2016.

Profiles & Listings companies attracted the biggest share of PropTech deals in 2017

  • Profile & Listings was the most represented sub-sector within PropTech last year, attracting almost a quarter of all deals, as increasing number of companies look to disrupt the traditional property search process. One of the largest deals in the space was the $12m Series B funding that Appear Here, a retail space listing platform, raised in Q2. The funding round was led by Octopus Ventures.
  • Property Investment platforms were involved in 21.4% of PropTech deals in 2017. Cadre, a New York based institutional real estate platform, raised $65m in Series C funding led by Andreessen Horowitz. This was one of the largest deals in 2017 and the capital was raised to further national expansion and increase headcount.
  • Online Agents & Brokerages were involved in 15% of deals, as technology continues to disintermediate the traditional estate agent model. Yopa, a London-based online broker, raised $34.9m in venture funding from LSL Property Services in Q3 2017. The money was raised to help Yopa expand its network of local agents and grow market share.

The data for this research was taken from the FinTech Global database. More in-depth data and analytics on investments and companies across all FinTech sectors and regions around the world are available to subscribers of FinTech Global. ©2018 FinTech Global

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