Figure 36: Probability of Success by Company Age
Given a sample set of six hundred PropTech companies that completed deals for more than a millions USD in the 2022 to 2023 fiscal year, Figure 36 shows the probability that those companies will be successful by their age. Here, “success” is measured by either an IPO or an M&A deal, whereas “failure” would be defined as a situation where there is No Exit. Most importantly, the entire ecosystem relies on an understanding that most companies in the startup world, something near 75%, do not have an exit, or fail to produce one in the lifetime of the company. Thus, it is not a surprise that younger companies will not show evidence of a strong probability of an exit. As a sign of this, for companies that will be two years of age by 2024, assuming a set of companies that are at least one year of age presently, shows that an average of less than half of these (44.14%) will have an exit, while the median presents an even more bleak future for these young companies, with just a 36% median success rate. However, when a company reaches three years, the picture becomes more optimistic, with an average of 67.67% of companies predicting success. That said, the median and average rates of success do not climb above 75% until a company is five to six years of age. What this evidence suggests is that new companies should have a “survival plan” which will allow them to continue to raise funding and inject capital into growth until they reach at least five to six years of age. At that stage, the probability of their success becomes much higher, consistently averaging over 80% once a company is seven years of age or older, while the median rate of success for such companies remains consistently above 84%.
Figure 37: Top Companies by Opportunity Score & Exit Type
Figure 37 shows the opportunity score and predicted exit type for our sample set of six hundred companies that raised more than $1 million USD in financing during the past fiscal cycle. The vast majority of these companies are predicted to have their exits be some form of Merger and Acquisition. Indeed, our modeling predicts 57.17% of these companies will either merge or be acquired in the future. By contrast, only 25 companies have either been financed through an IPO already or are predicted to achieve IPO status in the near future, while 41 companies are predicted to fail and have “No Exit.” That only 4% of companies are predicted to reach IPO status, while nearly twice as many (or 6.8%, to be precise) are predicted to fail is assuredly daunting. However, our predictive modeling has one weakness: there were no ascertainable predictions for nearly a third of companies (191, or 31.83%) simply because of missing data in the modeling information. Nevertheless, the picture of the present market is clear, for the vast majority of PropTech startups, the dream is more likely to be an M&A deal than an IPO. At the same time, when we aggregate the companies by opportunity score, there tend to be more companies aggregated toward the top end of the opportunity score distribution.
Figure 38: Number of Companies by Top Opportunity Score
Given the incredible challenges today’s market can present, it is somewhat surprising to see that there are more PropTech companies at the upper end of the distribution spectrum of Opportunity Score than at the lower end of the distribution spectrum. This occurs when we rank PropTech companies by their predictive opportunity score, a measure of the return on investment (ROI) that VCs might expect, while also taking into account the likelihood of an exit, additional funding and other factors, such as patents and technological innovation, where PropTech companies might have some competitive advantage when compared to the broader market.. However, it is worth noting that those companies in the top decile of opportunity score are much more likely (as much as three times) to secure an exit deal. Additionally, there are scant representations of potential IPOs among these top ranked companies.
One example of a company with a high opportunity score (94) and a high probability of success (98%) that is predicted to go IPO is Homeward. The next highest ranking potential IPO is Landvault (92 Opportunity Score, 97% success prediction). However, the VC opportunity score indicating the best return on investment may not correspond directly to the most stable investments in terms of companies that have a solid shot of going to market with an IPO. For instance, the top four companies in terms of their ranking of likelihood securing an IPO are VTS (92%), ZigBang (88%) and Casavo (83%), which is tied with Dubizzle Group (83%). However, the opportunity scores for these companies indicate that they might not result in the highest margins for VCs (being 71, 70, 68, and 68, respectively). At the same time, all rank at a 98% chance of success, and thus would make for more stable investments than a higher risk, higher return investment. Similarly, there are just four companies that stand to make great returns for VCs (with an opportunity score of 98, each), with a high likelihood of success (98%, each), and a high likelihood of an M&A deal (97%). They are: RealBlocks, Parallel Markets, Inspace, and Blockable.
Each of the above companies would make a great target for an M&A deal for a variety of reasons. Blockable is a company that emphasizes the construction of low-cost and connected communities. It is a new and relatively small company based in California, with just 23 employees. But more importantly, the company has already made it to the “seven-year mark,” which, as previously indicated, dramatically increases the likelihood of success for a venture-backed company. Finally, the investor track record, news article mentions, average deal size, number of investors and fundraising timing all strongly contribute to the predictors of success, with the most significant factor being fundraising timing (contributing 15 of 98%). By contrast with Blockable, Parallel Markets targets serving almost the opposite clientele, as it works to tokenize real estate investments, along with companies, funds, sports teams, and art. Yet, it is also quite small, with just 32 employees, based in NYC, and already five years old. Again, it is the fundraising timing (18% of 98%) that contributes the most to the predictors of success, although these are followed by the number of investors, investor track record, and the number of employees.
Both Inspace and RealBlocks are slightly larger companies, with 42 and 48 employees respectively. However, they are each quite small in the grand scheme of things. As both are founded in 2017, they are reaching the prime age for a Merger & Acquisition deal on the horizons. While RealBlocks focuses on the financial services end of transactions, providing a platform designed to connect advisors and investors to alternative investment managers. Inspace, by contrast, is the designer of a building imaging platform, allowing for the creation of HiFi VR experiences through manipulating sun settings by time and date, see new perspectives in sectioning and control visual settings in renders. However, while RealBlocks’ fundraising timing is contributing 12% to their predicted success, the same indicator for Inspace is contributing 18%. Yet, both rank in the 99th percentile in their industry subsectors of financial software and multimedia design, respectively.
The overall portrayal of the PropTech market for the coming cycle is one of both promise and uncertainty. While it is indeed possible that some companies will see astronomical growth rates, well exceeding the predicted ten-year industry average of 9.3% (2023-2023), it still seems relatively safe to predict that PropTech leaders will continue to “beat the market” during a time when growth is so moderate that it is predicted to be just slightly higher than current forecasts for inflation in the United States in 2024. At the same time, it is the particular technological innovations of PropTech that will help us all in the challenges of tomorrow.
In March 2023, the first in a series of four significant bank failures posed challenges to the underlying fabric of the economies of the North Atlantic. Silicon Valley Bank failed on March 10 and Signature Bank failed on March 12. With Silicon Valley Bank being based in Santa Clara, California, and Signature Bank being based in New York, two centers of the PropTech industry, PropTech companies were poised to absorb the impacts by the Ides of March. First Republic Bank, based in San Francisco, was also in trouble, requiring an injection of funds from other banks as of March 16 and by March 19, following rapid emergency negotiations with the Swiss government, UBS announced its planned acquisition of Credit Suisse for a deeply discounted $3.25 billion to prevent the bank collapse. While First Republic’s cash injection propped it up for a time, the organization was floundering and folded to a cash sale to Goldman in an acquisition by May 1. However, Silicon Valley, Signature, and First Republic banks were all in clear trouble before their failures, as was Credit Suisse. While there have been many hypotheses about the impacts of these bank failures on the PropTech industry, our case study will be among the first data-driven analyses specifically focused on the impacts on PropTech. Here we engage in what is called a “difference in differences” analysis. We will be reviewing the relationship between these banks and PropTech and how that relationship might have been transformed after the collapse of these banks.
The above image shows SVBs Quarter by Quarter PropTech investments, broken down by category, from 2018 through 2023. Their investments were relatively diversified, although they were most solidly invested in the Managing category. The image below, however, zooms in on these deals and assesses them by Industry Vertical in the months leading up to the failure. We see very large investment in the B2C vertical, as well as the Living category, with smaller investments in IT companies. Overall, these investments appear to be relatively diversified across categories of PropTech companies and Industry Verticals as well.
Figure 40: SVBs Most Significant PropTech Deals
The image above shows SVBs most significant PropTech deals, especially with Opendoor – one of the most transformational digital platforms for real estate in the United States and a company in the Managing category – and Roofstock – another online property marketplace, albeit one designed to help people buy and sell tenant-occupied properties – a company in the Investing category. Since these two companies represent leaders in the PropTech industry, it followed that there were some fears that there might be instability ahead. The circumstances were made worse by a series of events that unfolded in the coming days.
Of all of the significant bank failures in the Spring of 2023, Signature Bank was perhaps the least intertwined with the PropTech industry. First, Signature Bank was relatively young, having only been founded in 2001 when former employees and executives of Republic National Bank of New York jumped ship with their wealthy clientele after a purchase agreement with HSBC. The bank focused on New York clients, expanding only gradually beyond NYC, although it was one of the first banks to opt into the cryptocurrency market in 2018, with 30% of their deposits being cryptocurrency by 2021. After SVB had failed, Signature Bank customers withdrew $10 Billion USD in deposits. The bank failed, and at the time of its failure, 89.3% of deposits were uninsured. Loans and branches were acquired by Flagstar Bank and the venture banking portfolio was acquired by Customers Bancorp. Previously Signature Bank had drawn the ire of critics as they had underwritten $16 Billion USD in multifamily lending, the largest in the sector in NYC besides New York Community Bank. Ironically, however, given their reliance on cryptocurrency deposits, the bank did not invest heavily in the PropTech sector.
Of the three banks involved in the Signature Bank deal, being Signature Bank, Flagstar Bank, and Customers Bancorp, Signature Bank is the only significant potential PropTech investor, through their Mortgage Tech Accelerator Program, in Brace, a developer of a loan servicing platform designed to manage the loss mitigation lifecycle, in 2019, while Flagstar had also acquired Stearns Holdings, a provider of a residential mortgage delegated correspondent lending platform, in 2017. Although Signature Bank was not involved in PropTech in any structurally significant fashion, Flagstar looks to be. As of March 2023, they announced they were accepting applications for the fourth MortgageTech Accelerator program, which focuses on incubating startups operating at the intersections of financial and real estate technology.
It can be said that the acquisition deal of Credit Suisse, had little direct impact on the PropTech market, despite the fears of the potential of the bank for an outright failure and the impact on the market more broadly. Credit Suisse was only an active investor in just three individual PropTech companies: Wingtra, Equippo, and Workstation. Of these, Credit Suisse Entrepreneur Capital, under Dider Denat, had wisely invested in Wingtra’s new technology in 2019 in a round of Series A funding. In a further demonstration of the companies resilience, they completed a fifth round of fundraising on March 20th of 2023, raising some $22.6 Million USD, nearly double the fundraising of the round Credit Suisse Entrepreneur Capital had been invested in. Credit Suisse had also been an investor in an early round of fundraising for Equippo in 2018. Finally, Credit Suisse Innoventure Capital had been a significant investor in the early days of the company Workstation, although that company went bankrupt and was liquidated in 2005. Needless to say, Credit Suisse was not a major investor in the PropTech sector. Nevertheless, the organization has completed some very significant deals in the broader intersections of the Real Estate market and the Technology market.
As an important subfield in PropTech, Mortgage Technology companies make use of artificial intelligence (AI), other forms of machine learning, and blockchain technologies, among others, to revolutionize the process of lending. Mortgage Tech includes companies that cover all stages of the life of a loan for a property, beginning with origination and processing, as well as continuing through appraisal and payments. Key trends to follow in the field of Mortgage Tech include digital lending, underwriting, mobile apps for loan processing, fraud prevention technologies, improvements in the customer experience, reductions in operational cost, greater precision in documentation and approval processes, risk assessment tools informed by big data and data analytics, and online mortgage brokers and lenders. Nearly 50% of borrowers already prefer self-service online portals, while 90% of surveyed individuals from buyers and lenders say digital mortgage technology is a must, and 70% argue the use of Mortgage Tech helps reduce the time needed to close a loan. Further, the projected value of the digital lending markets was between $11.33 and $12.6 Billion USD as of the end of 2022, but is expected to grow tremendously over the next decade. Some projections show digital lending reaching a relatively conservative $30.77 Billion USD by 2030, although other projections show the global digital len
Figure 41: Mortgage Tech Investors
Figure 41 shows the most active investors in the field of Mortgage Tech in the past fiscal year. We can see that top tech investor venture firms hold the most active spots, with Goodwater Capital and Y Combinator each participating in four (4) deals, while the number three and four spots are taken by Love Ventures and Volution Ventures, each completing three deals. Two of these new ventures include Kashin (Consumer Finance) and Holocasa, each sponsored by Y Combinator. Holocasa is the developer of an end-to-end mortgage platform that allows real estate agents to prequalify and instantly rank their leads. Their platform also allows the prequalification process itself to be streamlined for consumers, by centralizing inquiries from up to ten financial institutions at once. In this way, Holocasa is working to streamline the loan application process, while Kashin is more directly providing a source of cash flow. Kashin, after all, is a developer of a microlending application designed to service small loans to underbanked communities, by utilizing a combination of social credit scores and other measures of security to provide access to capital from their headquarters in Lima, Peru. Since 1.4 billion adults in the world remain underbanked, including more than half of Peruvians, Kashin’s model could be a solution that spreads rapidly in developing markets.
Noah and other mortgage technology innovators have been fundamentally disrupting both the investing and the lending aspects of the housing market as a whole, through technologies that enable co-financing, co-investing, co-owning, and co-living. That said, the data reveals two giants have emerged in recent years in this space.
Figure 42: Mortgage Tech Key Fundraisers
Figure 42 illustrates the deals participated in by key Mortgage Tech fundraisers by deal size, date, and deal type. We can clearly see, based on this data, that Mergers and Acquisitions (M&A) deals grew significantly from 2020 onward. Further, through an analysis of this data, we quickly found ICE Mortgage Technology and Black Knight were the two most significant players in terms of recently completed Mortgage Tech deals, both with very significant deals falling into the Mergers & Acquisitions (M&A) classification of deals. However, the two companies have very different strengths.
Black Knight has focused primarily on data and analytics solutions – albeit solutions delivered through proprietary software – for consumer loans, real estate loans, and capital markets. Their strength has truly been automated valuation models, data integration, and risk assessment, which then drove their software solutions, although their software has driven most of their revenue. Black Knight was acquired by Fidelity National Financial for an undisclosed amount in 2014, before raising $441 Million USD in their initial public offering (IPO) in 2015. However, former shareholders became minority shareholders (45.72%), with New BKH common stockholders (from Fidelity National Financial Group common stock) controlling 54.28% of the shares as of a 2017 M&A deal, although the company also completed several secondary transition and debt refinancing deals from the same era, through 2021. Finally, in 2022, ICE Mortgage Tech and Black Knight announced an M&A deal for ICE’s acquisition of the latter.
ICE Mortgage Technology, like Black Knight, has been a developer of software products and services focusing on the processing of mortgage applications. The company began in 1997 as Ellie Mae, Inc. and was acquired by Intercontinental Exchange in 2020 for 11.4 Billion USD, becoming renamed ICE Mortgage Technology. Although ICE is most famous for its past acquisition of the New York Stock Exchange, which represents 55% of their revenue, they have used a series of acquisitions to generate substantial mortgage technology business (18% of revenue) and fixed income and data services segments representing a remainder of their revenue (27%). Their most recent major financing includes Morgan Stanley acquiring a 23.5% stake in 2021. However, ICE’s moves in the Mortgage Tech space have not gone without their criticism and scrutiny. After they acquired the MERS mortgage data repository in 2016 and the 2020 deal with the company formerly known as Ellie Mae (now ICE Mortgage Technology), ICE then announced a subsequent acquisition of Black Knight in 2022. The deal attracted the attention of the American Federal Trade Commission (FTC), citing concerns over ICE proprietary control over software that is expected to become the backbone of Mortgage Tech in coming years. However, the FTC withdrew their inquiries as of August 8, 2023. The opportunity for transformation here is enormous, given that under 10% of mortgages in the United States go through the process of digital notes. Hence, similar technologies adopted in the markets of Europe, Latin America, Africa and Asia could also prove equally revolutionary.
The stories of Matterport and Alice Technologies are certainly remarkable. Both companies have fundamentally transformed the future of the real estate industry. At first, Matterport made headway by digitizing records of existing buildings, paving the way, in a sense, for Alice Technologies to build upon their shoulders, and delve in the realm of simulation. Through simulating construction, companies can now lessen their carbon footprint, create more sustainable, safer, and longer lasting structures, speed up the pace of construction and reduce rework.
Overall, Construction Technology is the field that deals most directly with physical assets, while also interacting most intimately with the web of regulations that can ensnare any project. Furthermore, although we will deal with Climate Tech distinctly in Case Study 4, it is important to note that Construction Technology is on the forefront of addressing the many problems associated with the realities of Climate change. From the use of more sustainable construction materials, including the safe reuse and repurposing of formerly toxic materials, through energy saving technologies like smart glass, the Construction Technology subfield of PropTech is working to address these pressing problems as well.
Figure 43: Construction Tech Investors
Figure 43 shows the most active investors in the Construction Technology field in the past year. Notably, we see that investors are more active in the Construction Technology space at present when compared to the Mortgage Technology space. This difference may reflect the greater opportunities for technological innovation present in the Construction Technology field. Most active investors are, naturally, large venture capital firms just as Alumni Ventures (Manchester, NH) and Accel (Palo Alto, CA). However, they also feature the major accelerator/incubator companies, such as Plug and Play Technologies and Techstars. Furthermore, they also include sovereign wealth funds like Bpifrance and government investors like Innovate UK. Of these investments, 61.03% are based in the United States, while 8.59% are located in the U.K. and just 8.14% are located in the People’s Republic of China (PRC). Relative to overall investments in PropTech, this means that a lower proportion of Construction Technology investments are in the PRC in the past year, which runs counter to expectations. Additionally, while 154 French investors made up a substantial proportion of the market, in that they account for 5.69% of the capital raised, significant overall players in PropTech, such as German and Spanish investors, haven’t been as active in Construction Technology, suggesting there is space for growth in those markets in such countries.
Figure 44: Construction Tech Deals by Size, Type, and Year
Figure 44 is an illustration of the key deals by size, type, and year in the Construction Technology space. We can note that while there is substantial growth of Mergers & Acquisitions in the 2021 calendar year, following a similar pattern in the Mortgage Technology space, the sudden spike in M&A does not appear to be as anomalous in the Construction Technology space. For instance, a quite substantial number of large M&A deals were completed in 2018, well before “Pandemic Economics” was a significant disruptive force in its own right. Further, when we break these deals down by country, as illustrated in Figure 46 (below) we see some interesting points that emerge.
Figure 45: Construction Tech Deals by Country (All Time, Excluding the USA)
To begin with, our data shows that the really quite significant markets of the United Kingdom and France, when it comes to Construction Technology, are quite nearly matched by China and Japan. Germany, India, Australia, and Canada make up a second tier of major players. In a third, we have Spain, Poland, Saudi Arabia, Brazil, and Argentina. This is all to say that the east-west distribution and the north-south distribution of Construction Technology deals, once we exclude the USA from the dataset, is more balanced than other sectors of PropTech, including Mortgage Tech, where investments are more concentrated in the global west and north. Perhaps this is because ConTech represents one of the elements of the PropTech sector that is dealing most directly with the physical built reality of our everyday lives. Thus, the path toward integrating Construction Technology into developing markets may be more direct. Additionally, we have to consider that countries like China and Japan may provide additional governmental incentives for the technological development of infrastructure, which can be found in Europe, but are relatively lacking in the United States and Canada. Government incentives behind the development of publicprivate partnerships, indeed, help to explain the strength of both the Chinese and Japanese markets in this case.
Looking back at the history of Construction Technology deals, it is true that our data shows the early years of Construction Technology did not create many very large fundraisers. Nevertheless, a few notable players quickly emerged in the 2010s. For instance, Autodesk – a company focusing on providing software solutions for product design and manufacturing – completed very large general debt deals in 2013 and 2015, before completing significant debt refinancing deals in 2017 and 2020, and another general debt deal in 2021. The first really significant Construction Technology M&A deal was completed when Textura – a provider of ondemand business collaboration software – was acquired by Oracle for $698.3 million USD in 2016. There were then a series of significant M&A deals in 2018, including Aconex, Accordion, PlanGrid, and Gordian. This was the same year as Katerra’s crushing VC round. The deal sizes continued to crest through 2021, when Quanta Services announced the acquisition of Blattner Energy for a cool $3.015 Billion USD. The deal was also significant for Climate Tech, as Blattner Energy is a provider of EPC contractor services for green energy – especially wind and solar – including front end engineering, procurement, project management, and construction. In the most recent fiscal cycle, although the deals have been significantly smaller, they are still quite notable. For instance, Trimble’s acquisition of B2w Software was announced in September at a cool $322.1 million USD, which will allow the former to provide unprecedented end to end digital twins for heavy civil and infrastructure contracting.
Climate Technology – or Climate Tech – companies are among the most pathbreaking companies in the marketplace today. Climate Tech companies are defined as those with significant programs or products that are explicitly focused on reducing Green House Gas (GHG) emissions. Since Real Estate accounts for nearly 40% of GHG emissions, with 28% of global emissions coming from maintenance and operation and another 11% coming from construction and materials, investing at the intersections between Climate Tech and PropTech is vital for the future of the planet. Naturally, while B2B and B2C companies still form a substantial portion of the marketplace for Climate Tech, Energy, Materials and Resources, and Healthcare play significant roles, as does Information Technology. As of the end of the 2022-2023 fiscal year, nearly five thousand companies (4,998) had participated in more than twenty thousand deals (20,527) with the aid of more than fifteen thousand investors (5,229) to raise a total of $611.45 Billion USD.
We need to underscore that some companies in this dataset may not be first in the mind when discussed with the general public. Certainly, well-known innovators, such as Tesla and Northvolt are well represented in the historical data, but then again, so are international aerospace and defense firm juggernauts, like Boeing and Lockheed Martin. Indeed, Boeing might be an example of a company that a popular pundit might point to as a leading contributor toward climate change. At the same time, given that Boeing has invested more than $60 Billion USD in innovation and key technologies over the past decade, while reducing emissions by 15-25% with each new generation of airplanes – now 90% recyclable by weight for reuse of parts and scrap – it’s not entirely surprising to see the company as a major player in the Climate Tech space. Indeed, they have invested in more than 230 environmentally smarter technologies through the ecoDemonstrator program.
Figure 46: Climate Tech Key Fundraisers by Industry Vertical
Figure 46 shows the Top 500 Climate Tech deals in the past two decades, in all industries and all industry verticals. Most of these deals were completed between 2015 and 2023. When we consider the most recent and significant deals in the Climate Tech space in the past year, a few leaders emerge at the top of the list. To begin with, breaking news as of the writing of this year’s Barometer, Northvolt received $1.2 Billion USD in debt financing from Volkswagen, Swedbank, Morgan Stanley, J.P. Morgan, Goldman Sachs, and other major lenders in August 2023. Almost a year ago, another truly significant deal resulted in Rubicon Technologies’ acquisition of Founder SPAC for $1.7 Billion USD through a reverse merger, bringing the combined energy to the market through the NYSE (RBT), as of August 15, 2022. Rubicon is a software platform that provides full-service waste management and recycling solutions to smart cities. Naturally, although their work is most often described as ClimateTech or CleanTech, as well as SaaS and Mobility Tech, Rubicon’s solutions for smart cities have a direct impact on real estate spaces, whether they be commercial or residential.
Another top leader in the recent Climate Tech fundraising space has been Lanza Tech, a nature-based carbon refining company that works to transform carbon waste into building blocks for consumer goods. These goods might be fuels, fabrics, or packaging. Their most recent financing resulted in $500 million of development capital through a private placement PIPE deal in February 2023. Additionally, as announced in March 2022, Lanza Tech was acquired by AMCI Corp II through a $2.23 Billion USD reverse merger, resulting in the combined entity trading on NASDAQ (LNZA). Notably, in both the cases of Rubicon and Lanza Tech, we observe the companies being brought to the public exchanges through SPAC/reverse merger deals, which is a phenomenon we highlighted in last year’s barometer as an increasingly popular strategy in the PropTech ecosystem.
A good example of a top leader in the Climate Technology space that is still receiving rounds of VC funding is Redwood Materials, a developer of sustainable battery recycling technology, concentrating on production and reprocessing of batteries from consumer products (such as laptops, power tools, e-bicycles, and more). Because of the nature of their products, Redwood Materials is naturally intertwined with the developments of Real Estate technology, especially in terms of thinking about how commercial real estate is undergoing a transformation as the climate of the office space is revolutionized. Power tools are used in construction, e-bikes for transportation, and while desktops were the staple of the office space in the past, laptops have become the contemporary standard office supply. Redwood Materials completed a Later Stage VC deal in July 2022, followed by a significant $2 Billions USD in general debt financing in February 2023.
Finally, while H2 Green Steel is a younger company than Redwood Materials, having received their first round of financing in just 2021, they remain equally as promising. The company operates a steel production plant that is intended to develop and deliver fossil-free steel in Sweden. Unquestionably, the possibility of a green steel solution would fundamentally revolutionize construction, in Europe, but also across the world. As of October 2022, the company had raised 260 Million Euro in Series B venture funding and is last reported to have been in talks for a round of Series C venture funding as of April 2023.
Figure 47: Real Estate x Climate Tech Investors
Although, as highlighted above, a significant number of the companies operating explicitly in the ClimateTech space naturally overlap with the concerns and interests of PropTech, the number of companies that truly intersect with both fields in their day to day operations is a significantly smaller, albeit rapidly growing, community. Some 439 investors have been involved in 244 deals, helping to raise over $200 Million USD for 61 companies operating at the intersection of these two fields. Between 2014 and 2022 calendar years, the only year where the number of deals decreased was during the 2016 calendar year, when just eight (8) deals were completed. However, the number of deals had doubled by 2019 and tripled by 2022, totaling 27 deals in the 2022 calendar year. The most active investors in the 2022-2023 fiscal year were Energy Impact Partners, Moderne Ventures, and Suffolk Technologies. Energy Impact Partners is a Private Equity firm based in Boston, MA aiming to invest in the decarbonization of the global economy. By contrast, although they are venture capital firms more concentrated on investments in the PropTech community, Moderne Ventures and Suffolk Technologies have emphasized commitments to emerging technologies as their most exciting investments. The behavior of such investments begs the question: How are PropTech companies helping to transform the ClimateTech space?
Figure 48: Real Estate x Climate Tech Key Fundraisers by Category, 2013-2023
The above image shows the key PropTech companies that are innovating in the Climate Tech space, aggregated from data collected over the past decade. Much more of this segment of the PropTech market is in the Building and Living categories, two categories that we previously highlighted may have substantial potential for growth in the near future. Between 2012 and 2023, the top five PropTech fundraisers working in the ClimateTech community are Planet Smart City, Peak Power, Wunder Capital, Measurabl, and Mighty Buildings.
Planet Smart City raised $70 million USD of series C funding, aiming to close the round as of April 2023. The company is a designer of real estate housing developments emphasizing the build of smart neighborhoods, including architectural, digital, environmental, and social innovations. They aim to help businesses develop entire neighborhoods that foster a sense of community, with a mind toward sustainability. Relatedly, Mighty Buildings is a developer of 3D printing technology and automation platforms aiming to make the construction of housing more sustainable and affordable. Mighty Buildings raised $50 million in Series B1 venture funding in January of 2022 and is currently ranked as a prime company for a targeted merger or acquisition, as they remain quite small to be considered a good investment for an IPO. Nevertheless, their innovative use of 3D printing technology is certainly of note.
White Planet Smart City and Mighty Buildings are focused on the provider end of the real estate market, Peak Power, Measurabl and Wonder Capital are focused on key elements of the maintenance and management life cycle of properties. To begin with, Peak Power is a developer of AI-power energy optimization software. The likelihood that this company moves to market through an IPO is considered more likely than, say, Mighty Buildings, which is surprising, since they are also a rather small company. However, perhaps some perceived longevity of the organization is buttressed by the several rounds of grant funding (2017, twice, 2019, 2020, and 2022, twice) and venture funding, which they have successfully raised. Most recently, the company raised $35 million of venture capital in a Later Stage VC round, completed in May 2023. Meanwhile, Wunder Capital, an operator of solar investment funds connecting investors with solar projects raised an impressive $47.57 million in capital as of May 2022. However, Wonder Capital is another company where the likelihood of an exit as of this writing trends toward the probability of an M&A deal, rather than an IPO.
A final top PropTech fundraiser in the Climate Tech space is Measurabl. Like Peak Power and Wonder Capital, Measurabl should be considered as concentrated on the maintenance and management life cycle of real estate. They are, after all, the developer of a data management platform intended to provide informed analysis of the sustainability performance of real estate spaces. Most recently, they received $93 million USD through a combination of Series D and Series D-1 funding in a deal led by Energy Impact Partners and Sway Ventures, with the former being one of the lead active investors in the past year, as we previously mentioned. While there are clearly challenges for companies operating at the intersection of PropTech and Climate Tech, not the least of which is the nature of Climate Change itself, these companies also present tremendous opportunities to leverage new technologies and transform the global PropTech industry for the better.
