VCs Poured $2.9B into Proptech Deals: Report
Venture capital accounted for the majority (70%) of 2023 industry-wide investment in proptech, with 144 deals closed for a total value of $2.9 billion, a significant decrease from 2022 as deal making was hampered by the general slowdown in most other asset classes, according to Valley Bank research.
However, venture dealmaking in proptech remained resilient, or at least strong by historical standards, implying that the resiliency noticed in 2022 may still be present in some industries.
The third annual “The Present and Future of Proptech” report examined key macro factors shaping proptech on the economic, demographic and market fronts as part of the backdrop to private investment trends.
According to Valley Bank, the number of deals centered on property management and transaction solutions increased in 2023, while overall deal values remained proportionally focused in those same proptech areas. Physical property management, the installation of energy-saving technologies, and analytics packages were also prioritized.
Although predominantly concentrated on venture capital, private investment remains critical to advancing proptech innovation, according to the research, while the efforts of other investment firms or non-traditional asset managers demonstrate the sector’s maturity.
Corporate venture arms and corporations themselves withdrew only in terms of the number of deals in which they engaged, not the magnitude of the transactions themselves. They participated in 22 financings totaling $2.1 billion in deal value.
“The need to continually develop and implement tools such as AI in service of sustainability and efficiency still exists and will drive deal making – particularly on the VC side as firms balance caution with sufficient investment in Proptech’s gradual spread across multiple aspects of the property sector,” the report noted.
The research was developed in collaboration with Pitchbook, Chris Green, founder and CEO of GreenPoint Partners and Zak Schwarzman, general partner, MetaProp.