Proptech firms struggle to fundraise
Cadre among real estate tech ventures trying to hang on
Startups that survived the proptech apocalypse aren’t out of the woods.
Companies are struggling to fundraise as investor interest wanes, The Information reported. These firms are bogged down by a number of factors, including rising interest rates, office vacancies and cash burn.
The slog for firms across the sector is illustrated no better than Cadre, which was valued six years ago at $800 million and drew investors such as Andreessen Horowitz, Thrive Capital, Jack Ma and George Soros. The commercial real estate investment platform was pegged at increasing access for all.
In 2017, it promised annual revenues of at least $400 million in only a few years. The firm almost scored an investment at a $2 billion valuation from SoftBank, but that fell apart.
Investors learned last year it was going to pull in less than $30 million in annual revenue and fail to be profitable. In the last six months, the company is struggling to raise even tens of millions of dollars.
Cadre has discussed raising a type of debt where investors could convert cash into equity as a $100 million valuation ceiling if other firms invested, sources told the outlet. Someone pitching on behalf of the company was trying to reel in investors at a $155 million valuation. A spokesperson for the company disputed the accounts of the fundraising efforts.
The company is shooting for $120 million in net revenue by 2025.
Cadre — co-founded by Jared Kushner — isn’t the only real estate technology company where fortunes appear to be sagging. The average pre-money valuation of proptech firms this year is $64 million, according to PitchBook, the lowest level since 2013. New funding is at its slowest pace since 2015.
The lofty aspirations of a handful of proptech companies that went public in recent years might have something to do with investors’ fatigue.
Eight venture-backed firms in the industry have a market value below the private capital raised and each have seen market value decline by at least 80 percent since going public. Those firms include Sonder, WeWork, Offerpad, Opendoor and Compass.
— Holden Walter-Warner