Is the big real estate tech merger wave right around the bend?

Small deals point to broader trend

Common’s acquisition last week of the room-listing site Skylight wasn’t exactly marquee news. Common, which runs three co-living buildings and has raised $23.3 million in venture funding, is a small company by any standard, and Skylight is even smaller. But the deal could be the precursor of something bigger that observers have been predicting for a while: a consolidation wave in the real estate tech industry.

“Look at the M&A space in general – I mean it’s exploding right now,” said Zach Aarons, co-founder of real estate tech accelerator Metaprop. “You’re reaching the tail end of a bull market and that’s what typically happens at the tail end of a bull market. That just trickles down to startups.”

This week alone, pharmaceutical company Bayer reached a deal to buy Monsanto for $57 billion and food giant Unilever entered talks to buy retailer Honest Cos. for somewhere near $1 billion. Fueling the merger wave since at least 2015 are cheap debt and big cash reserves. To a lesser extent, the same forces apply to real estate tech startups.

Moreover, observers have long argued that there are simply too many real estate tech startups (often performing similar functions) and too few customers. Venture investors have got more cautious about betting on new entrants: the second quarter of 2016 saw the fewest real estate tech venture capital deals in four years, according to data from research firm Pitchbook. Without a continuing influx of cash, startups struggling to make bank will have to merge or fold sooner or later.

So far, few have done so, but the past weeks have shown tentative signs that could change. “It is happening in this industry,” said Ajay Yadav, founder of New York-based roommate-search app Roomi.

This week Roomi announced the acquisition of, another roommate-search app. Yadav declined to comment on the terms of the deal, but it’s safe to assume Roomi didn’t pay a lot of money (it has announced just $6 million in venture funding to-date). According to Yadav,’s founders were looking to move on from their startup and wanted to get something for their software and customer base rather than just fold it.

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For Roomi, the main appeal of the acquisition was scale: it is expanding into California, where happens to have a user bare that could be migrated over to Roomi. Pop-up store online marketplace Storefront may have had a similar thought in mind when it acquired its European rival Oui Open in a deal announced last week. For Common, part of the appeal of acquiring Skylight lay in technology and data. According to a statement, Common [TRDataCustom] wants to use the search site to “understand the demand for shared housing from a larger pool of prospective residents.”

“Real estate tech startups can no longer be siloed platforms,” said Ash Zandieh, CEO of commercial property information app Falkon and founder of RE: Tech. Those who want to compete need to offer a broad range of services, and acquiring other companies can help achieve that. In May, right after raising a $55 million Series C round, VTS CEO Nick Romito told The Real Deal that the cloud-based leasing and portfolio management startup would look to gobble up competitors.

“There’s consolidation to be had,” Romito said at the time. “Whether it’s via acquisition or acqui-hire, they [our investors] want to help us.”

According to Aarons, real estate tech entrepreneurs aren’t just increasingly talking about mergers and acquisitions, but also about integrating separate companies’ products in an attempt to get some of the benefits of mergers without having to actually merge. For example, crowdsourced leasing comps provider CompStak recently reached deals with VTS and Hightower to include its comps in their products.

Acquiring other startups can be difficult, Aarons said. “You don’t really have real valuations and you have a lot of common equity that may or not be worth money,” he said. “You have small boards and big egos.”