Proptech 20 resilient in the face of headwinds

The macroeconomic climate may not have created optimal investment conditions, but the ranking reached a new fundraising milestone in H1 2023.

Set against a challenging macroeconomic backdrop, fundraising in the private property technology capital markets has slowed.

PERE’s annual Proptech 20, showcasing the world’s top property technology fundraisers, reflects this trend, and that was most notable at the ranking’s summit, where the top four firms, led by first-placed Fifth Wall, kept hold of their positions. The Los Angeles-based firm and fourth-placed Camber Creek did not add capital to their totals in the 12 months between this year’s ranking and last year’s, either. Such a lack of movement is mirrored in deployment data, as well.

According to the Center for Real Estate Technology and Innovation, proptech investment momentum slowed in Q1 2023 due to cautious market sentiment, with $1.69 billion invested compared with $7.44 billion invested in Q1 2022.

However, despite evidence of a sluggish fundraising performance in H1 2023 among some of the top tier firms, the Proptech 20 reached a new milestone by surpassing $10 billion in fundraising, with $11.28 billion amassed by the collective firms.

The share of the market for the leading cohort of managers has also increased despite the slowdown, with 87 percent of capital being raised by the top 10 firms, compared with 84 percent in last year’s iteration.

From a regional perspective, the Asia-Pacific region closed the gap in this year’s Proptech 20. Fifth Wall’s closest competitors – Shanghai-based Hidden Hill Capital and Hong Kong-headquartered Gaw Capital Partners – comprise just over $4 billion between them, up from $2.8 billion recorded in 2022’s Proptech 20. Asia-headquartered firms make up over a third – 38 percent – of capital raised in this year’s Proptech 20, up from 32 percent in 2022.

The biggest mover by capital raised in this year’s Proptech 20 was the rebranded A/O (formerly A/O Proptech), which rose to fifth spot after breaking into the top 10 in 2022. The UK-based firm more than doubled its total to raise over $550 million in the five-year period.

Despite the headwinds, there is reason to be optimistic, as proptech continues to attract investment thanks to the drive to innovate the real estate market. Present fundraising conditions may be challenging, but the future looks brighter.