Real estate technology accelerator MetaProp NYC’s latest PropTech confidence index reveals cautious optimism amongst investors and startups.

In the wake of WeWork’s swift and spectacular fall from grace, proptech investors are moving forward with cautious optimism, according to real estate accelerator MetaProp NYC’s latest Global Proptech Confidence Index released on Thursday.

Based on responses from more than 2,300 survey takers, the Investor Confidence Index dropped from 8.8 out of 10 in the first half of 2019 to 8.0 in the second half of the year. Meanwhile, the Startup Confidence Index dropped 0.1 points to 7.2 during the same time period.

Despite the semiannual decline in confidence, investors and startups are more confident than they were during the second half of 2018 with respective scores of 7.7 and 7.0.

Aaron Block

“To me, this period’s results demonstrate proptech’s resilience,” MetaProp NYC Co-Founder and Managing Partner Aaron Block said in a prepared statement. “Both proptech investors and proptech startups clearly believe that technology-led innovation will remain a growth engine and value driver for the real estate industry.”

“I’m particularly encouraged by the investors’ consistent optimism,” he added.

On the investing side, 55 percent of investors said they’d reduce (15 percent) or maintain (40 percent) their current investment pace. On the other hand, 45 percent of investors said they’d invest in more startups in 2020 — a 19 percent decrease from the first half of 2019.

When it comes to the type of startups investors are looking for, smart buildings (30 percent), real estate finance (27 percent), and architecture, engineering, and construction (18 percent) were the most popular.

Investors were most excited about adding startups at the seed (65 percent) or Series A (73 percent) level to their portfolios, while later-stage startups at the Series C (8 percent) and Series D (3 percent) were the least attractive, since Series C rounds are usually a startups’ last and Series D rounds could signal instability.

“A series D round of funding is a little more complicated than the previous rounds,” read an investing primer on “They’ve discovered a new opportunity for expansion before going for an IPO, but just need another boost to get there. More companies are raising Series D rounds (or even beyond) to increase their value before going public.”

“[Or] the company hasn’t hit the expectations laid out after raising their Series C round,” it continued. “This is called a ‘down round,’ and it’s when a company raises money at a lower valuation than they raised in their previous round.”

In addition to taking a more conservative approach to investing, investors said they expect the proptech space to experience “consolidation” as companies are acquired or shutter due to an inability to reach profitability.

“…The impacts of WeWork are reverberating through the asset class,” an unnamed investor told MetaProp. “Expect to see a tougher fundraising environment from institutional VCs.”

“More companies will begin to fail due to investors becoming more conservative regarding capital deployment due to both (i) a shift toward focusing on companies that can reach profitability earlier in its life cycle and (ii) election year presenting unknowns for what the macroeconomic picture looks like in 2021 and beyond,” another added.

Despite investors’ cautious approach, startup founders are remaining confident in their ability to raise funds with 58 percent saying the difficulty in attracting investors will be “about the same.” Meanwhile, 23 percent expect it to be easier and 19 percent expect it to be harder to raise.

As competition in the proptech space heats up, startups are streamlining — the majority of founders plan to hire less than 5 people in 2020 (45 percent) while leveraging their current workforces to generate explosive sales growth (26 percent have a 5x growth target).

“WeWork’s collapse leads to a focus on profitability over growth and more due diligence around fundraising,” an anonymous startup founder said.

Email Marian McPherson

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.
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