The Next Phase of Real Estate Tech

The Next Phase of Real Estate Tech

Over $5 billion was invested in real estate technology in 2017. The sector has strong momentum, and according to Matt Harris from Bain Capital Ventures, we are entering the third wave of real estate technology. 

43North Startup Competition

43North Startup Competition

Our friends at 43North are looking for awesome startups that are willing to relocate to Buffalo, NY and receive a $500k or $1M investment. 43North has crowned 37 winners since coming on the scene as part of Governor Andrew Cuomo’s Buffalo Billion initiative in 2014.  Alumni of the program have gone on to raise more than $70 million. See their portfolio here

Video: Increasing Sales with Market Segmentation

Video: Increasing Sales with Market Segmentation

Startups have a limited budget for marketing, so it's critical that they prioritize how those dollars are spent. Market segmentation can help startups prioritize their resources to achieve the largest impact with the leanest budget. It's a data-driven exercise and a key component of any marketing plan. In this webinar, Stephen Bouikidis and Mary Jordan of Magma Digital will present tools and tactics that enable founders to evaluate opportunities and reach new audiences. 

CRE Data Startup Reonomy Partners with Newmark

CRE Data Startup Reonomy Partners with Newmark

Commercial real estate just got a little more efficient. CRE data startup Reonomy announced a new $16M funding round led by Bain Capital Ventures.  The startup is also entering a partnership with Newmark Knight Frank, allowing the brokerage to layer Reonomy data atop its own data. We dive into the big problem Reonomy is solving. 

Market Segmentation Fundamentals: Why Segmentation is Critical to Customer Growth

Market Segmentation Fundamentals: Why Segmentation is Critical to Customer Growth

Market segmentation is a data-driven exercise that founders should engage in at various points after they begin selling to customers. To figure out your market segments, your team should be looking at factors such as market size, growth rate, CAC, win rate for gaining customers, and average LTV. Based on these numbers, you can then determine your sales activities, marketing initiatives and even your product roadmap. In this series, we'll discuss key topics around market segmentation and give you a framework for doing it effectively for your startup. 

How to Create a Scalable Customer Interview Process

How to Create a Scalable Customer Interview Process

It's critical to constantly get feedback from customers when building a startup. Maybe you are launching a new product or rolling out a new feature. Maybe you are just launching your company and you want to get feedback on your minimum viable product. Maybe your feature set has become unwieldy and you are trying to figure out which parts of the product people value the most. Here's a way to conduct customer interviews in a scalable way. 

Sidewalk Labs Launches API Layer for Urban Mobility

Sidewalk Labs Launches API Layer for Urban Mobility

Sidewalk Labs announced the launch of a new spinoff company, Coord, that will be a connective tissue for street-related data, government, private companies, emerging mobility services, and the people who live in cities. Coord is an API layer for transportation and a coordination platform for mobility services, navigation tools, and urban infrastructure. The company can help a ride-hail service make safer curbside drop-offs, help a navigation app show bike-share options, or help a car-share service give members a better sense of the true cost of their trip.

Real Estate Developers Begin to Future-Proof the Parking Garage

Real Estate Developers Begin to Future-Proof the Parking Garage

According to the WSJ, Developers are starting to future-proof parking garages that may be obsolete in the coming years. With autonomous vehicles becoming an inevitability, garages must be designed to be used for cars now and repurposed for other things later. Master-planned projects in cities like Toronto, Los Angeles, Oslo, San Francisco and Boston are being built with features like curbside drop-off areas for passengers and e-commerce deliveries, which will replace traditional parking lanes. Developers in high-density areas are looking to existing parking infrastructure for conversion projects, with an added benefit of being able to label these "sustainable" projects because they conserve materials. 

Built Environment Venture Capital Database

Built Environment Venture Capital Database

Every day at Dreamit UrbanTech, we interact with new startups transforming this supply chain, and as part of our 14-week growth-focused program, we bring select startups on a 2-week "Investor Roadshow" where they meet with dozens of investors from both generalist firms and from firms focused on real estate, construction, and products for smarter cities. We wanted to share some of our favorite firms focused on the built environment so you can use it as a resource for fundraising. We will continue to maintain this spreadsheet and will be updating it regularly with new venture investors who we meet who are committed to transforming real estate, construction, and the built environment.

Mount Sinai Starts Pilot Program with Wellth, an App that Increases Adherence with Financial Incentives

Mount Sinai Starts Pilot Program with Wellth, an App that Increases Adherence with Financial Incentives

According to Healthcare IT News, Mount Sinai Health System is trying a new way to get high-risk patients to take their medications: financial incentives. The founders of Wellth met executives from Mount Sinai as part of Dreamit Health's customer immersion program when they took part in Dreamit Health Fall 2016 cohort. Now, the startup has enrolled 12 patients in a pilot with the New York health system (supported by a grant from Health 2.0 and the New York City Economic Development Corporation). 

Katerra, the Foxconn of Construction, Raises $865M from Softbank

Katerra, the Foxconn of Construction, Raises $865M from Softbank

Katerra is attempting to disrupt the construction industry "design-bid-build process" by creating a full-stack solution for the building process. The startup works with real estate developers to replace any or all of the disparate parts of the building supply chain, including architecture firms, contractors, subcontractors, engineers, and materials producers. 

Proptech Industry Matures, Seed Funding Slows

Proptech Industry Matures, Seed Funding Slows

Trends in Seed Stage Venture Capital: 

  • Across all areas of venture capital, more capital is being invested in funding rounds than ever before, but the number of companies receiving investment has dropped. This suggests that fewer deals are getting funded at the seed stage and investors are focusing more on later rounds of funding. 
Via Axios

Via Axios

  • The number of angel investors in the United States is larger than ever, but it is becoming increasingly difficult for seed stage companies to raise funding. Angel investors are becoming much more selective. After a boom in angel investments over the past 3-5 years, many investors may be waiting for more liquidity, and some may have shifted investments to other asset classes after witnessing the difficulty of scaling a startup. 
seed-funding-trends

One reason this may be happening is that VCs are doubling down on “winner take all” leaders in their industries. According to TechCrunch:  

Since 2014, aggregate funding into late-stage rounds has hovered around $55 billion a year, though it will be somewhat lower this year. Today’s $1 billion private financing round was unheard of a decade ago. Recent $1 billion raisers Airbnb, Spotify, WeWork and Lyft have joined previous billionaire raisers, including Uber, Facebook, SpaceX and Flipkart, and point to a strong trend to concentrate “winner take all” funding into companies that have real potential to lead or dominate their segment.
  • Investors are grappling with the proliferation of seed stage startups. It has become increasingly difficult for investors to stay informed about hundreds of startups being created to solve issues across all industries. Investors have begun to focus on very particular sectors, reducing the flexibility of the capital currently being deployed. 
  • The public market boom does not appear to be driving much interest in seed stage deals or angel investing. As stocks have hit all-time highs and corporate profits have surged, angel investing at the seed stage has still slumped (but the number of corporate VCs has risen). 
  • More early-stage investors are putting their money into cryptocurrencies like Bitcoin, which have seen almost unbelievable returns, but this market has become much more volatile over the past week. 
  • Unicorns (private companies with $1B+ valuations) are staying private longer, reducing the number of engineers who spin out of these companies and launch their own startups upon IPO. 

What's Happening in PropTech? 

In the past four years, proptech startups have raised about $6.2 billion in funding worldwide, according to a recent report by Altus Group, an advisory services firm. In 2016, there was a record of nearly $2.7 billion invested in real estate tech companies, according to the Commercial Observer. Funding for real estate tech companies in the New York metro area climbed from $73.9 million in 2013 to $227.8 million in 2016, according to Dow Jones VentureSource.

These trends are fantastic, but they paint a rosy picture that does not tell the full story for seed stage startups. 

  • This slump in seed stage deals discussed above appears to be affecting proptech funding as well, as venture capital firms and traditional real estate development companies are putting more capital into mature companies raising Series B, Series C, and later rounds.
  • The funding market has also become more competitive, as a number of accelerators, seed funds, and real estate family offices have shown an affinity for the proptech sector. For example, Brookfield Property Partners, Silverstein, and Rudin Management Company (via Rudin Ventures) are now investing in early stage proptech ventures. (Full Disclosure: Dreamit partners with many of these firms as part of its UrbanTech program.) These firms have generational assets that they can leverage to the benefit of the startups they invest in. 
  • According to the Observer, "the other reason why seed funding will be difficult to obtain is because today there are clear stars in the field, such as project management resource Honest Buildings, property management platform VTS and real estate investment firm Cadre. And most investors want to get on board with winning companies that will clearly become profitable, rather than take a chance with a smaller startup." 

While seed funding has corrected, the New York proptech seen has never been better. Enthusiastic founders are solving real problems, and venture investors and family offices are collaborating like never before to find ways to bring these products to market. Our team, for one, has met with hundreds of founders this year alone, and we're excited to meet even more in 2018. 


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