“We’re at the beginning of a wave in proptech or real estate tech that happened in fintech starting about a decade ago,” Merritt Hummer, principal at Bain Capital Ventures, said on stage at Columbia Business School’s and Goodwin’s 2019 Real Estate Capital Markets Conference on Friday. She was joined on a panel by Robert Entin, chief information officer at Vornado Realty Trust; John Helm, managing director at Real Estate Technology Ventures; and Kent Tarrach, vice president of asset management at Brookfield Property Partners. Zach Aarons, co-founder of MetaProp, moderated the discussion.
Hummer said that FinTech saw only about $1 billion worth of capital in 2008 but more than $10 billion last year, and proptech was on a comparable trajectory. “What’s happening in the PropTech space is very similar,” she said, “And in fact, it’s actually an even faster acceleration.”
Entin echoed Hummer’s point, noting that cybersecurity was about 10 percent of his job a decade ago but has tripled since then.
Helm said RETV is trying to invest almost exclusively in tech firms that can offer very concrete benefits, namely cost cutting.
“We’re very focused on tangibles,” he said. “Will this company actually reduce operating expenditures?”
At Brookfield, the company is focusing on augmented reality, according to Tarrach. “We believe that’s going to have a real impact on our business because it brings up the conversation about digital property rights,” he said. “Does someone have the right to put up a digital billboard on the outside of my building?”
Several emerging startups are trying to tackle the housing affordability crisis, according to Hummer, but she expressed concern about their viability in a different type of market, particularly a downturn.
“There are a lot of startups out there that we worry will feel less resonant in a down cycle if interest rates go down and housing prices go down,” she said.
But as proptech continues to see a boom in activity, there are some concerns.
Until more recently venture capitalists have mainly focused on the software industry, according to Helm, so those firms don’t always understand how different things are in the real estate industry. He said this can drive up the valuations of proptech firms, which RETV is concerned about.
“I don’t think that’s going to end well,” he said.