Real estate technology breaks annual VC funding record

Sector received $32B in capital investment this year, bouncing back from 2020, report indicates

New York /
Dec.December 21, 2021 02:30 PM

According to the Center for Real Estate Technology & Innovation, investments in the sector hit $32 billion this year. (iStock)

As proptech went mainstream in 2021, investors poured an unprecedented amount of cash into the sector.

Venture capital investments in “real estate technology companies” hit $32 billion this year, according to a report from the Center for Real Estate Technology & Innovation, narrowly beating out the previous annual record, $31.6 billion, set in 2019.

The report did not clarify its definition of real estate technology. The proptech sector had received $9.5 billion from investors and venture capital as of mid-November, according to CB Insights data, breaking the annual record of $9 billion set in 2019.

Still, the CRETI figure represents a 28 percent increase from the same report in 2020.

The report broke down the amount of venture capital filtering into real estate by both sector and stage. Residential real estate accounted for nearly half (49.1 percent) of venture capital. The multifamily sector, counted separately from commercial real estate, ranked second with 20.8 percent, while construction and commercial real estate accounted for 18.9 percent and 7.6 percent of investment, respectively.

“Following a year of uncertainty, the venture capital and real estate tech entrepreneur market is back in a meaningful way,” said CRETI chair Ashkán Zandieh. “The continued growth of the sector has seen new investors across multiple stages enter the market, including private equity groups and institutional organizations.”

Unicorns have galloped throughout the proptech world during this record-setting year. Most recently, Lessen, a real estate management platform connecting property owners with service providers, joined the party after almost quadrupling its previous fundraising with a $170 million Series B that valued the startup at more than $1 billion.

One of the earliest venture capital firms to focus on proptech, MetaProp in June closed a $100 million fund, — its largest to date — aimed at backing early-stage companies.

“Proptech is now a household name in both the public and private equity markets,” MetaProp co-founder Zach Aarons said after CRETI’s report. “The cat’s out of the bag.”

Venture capital isn’t the only area where proptech is hitting big numbers. Through August, proptech M&A deals totaled more than $18 billion — on pace to easily surpass the $21.9 billion transacted last year.

“This record-breaking flow of capital into the category demonstrates that the real estate industry is embracing and deploying technology, and proptech is no longer a niche investment area,” said Fifth Wall co-founder Brad Griewe.





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