Investment dollars are flocking to real estate technology, and there are a few things companies can do to attract a piece of that pie.

  • We've seen six consecutive years of consistent outperformance and growth in the real estate tech sector.
  • If you want to be acquired, don't be a one-trick pony.

NEW YORK — Investment dollars are flocking to real estate technology, and there are a few things companies can do to attract a piece of that pie.

That’s according to Chris Gough, managing director at investment banking firm GCA Savvian Advisors, who spoke at CEO Connect at the Inman Connect conference today. He represented dotloop when it was acquired by Zillow Group as well as ZipRealty when it was acquired by Realogy.

There have been six years in a row of consistent outperformance and growth in the real estate tech sector and some funds have been increasing their real estate tech exposure (examples are RRE Ventures and Thrive Capital), according to Gough.

“In 2016, we expect there will still be access to capital markets for $10 million to $2 billion deals,” Gough said.

“There are a lot of well-funded international portals and businesses that I could easily see looking into the U.S. market for stability,” he added.

He noted that 80 percent of the dollars that went into real estate tech in 2015 were either seed or Series A funding rounds.

IPO activity has slowed down in 2015 relative to 2014 in this space because companies like Airbnb and DocuSign have gotten financing that allowed them to remain private, Gough said.

“Most of the dollars in this space are going toward innovation enabling technologies” to help agents improve productivity and transaction volume, he said.

“The important thing to attract private equity is to provide a platform business and not just be a single-service provider,” he added.

Money is also going toward disruptive lending platforms and companies that keep the agent at the center of the transaction, according to Gough.

For real estate businesses, this means four things, Gough said:

  • Shift your focus from growth to a scalable business model.
  • Build a capital buffer for your company.
  • Try to build beyond being a “one-trick pony.” Don’t focus just on real estate, but on real estate and mortgage or real estate and insurance or real estate and something else — that’s what’s going to get buyers interested.
  • At least entertain the conversation of M&A (mergers and acquisitions) because you want to explore all avenues available to you.

When asked by Inman publisher Brad Inman whether there were some companies “on fire” to look out for, Gough stressed he wasn’t offering investment advice, but did highlight three companies:

Predictive analytics company SmartZip and customer relationship management (CRM) firms BoomTown and Commissions Inc. The latter is a “sleeper” focusing on higher productivity teams, Gough said.

Editor’s note: This article has been corrected to fix Gough’s title and to note that he expects there will still be access to capital markets for $10 million to $2 billion deals this year, not $2-$10 billion deals as stated in a previous version of this article.

Email Andrea V. Brambila.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×