Funding for startup Proptech on track to hit real estate records in 2021

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CHICAGO, August 25, 2021 / PRNewswire / – Real estate startups have increased 300% over the past decade, taking advantage of the opportunity to tackle the industry’s biggest challenges with technology. Data released today JLL (NYSE: JLL) suggests that startup opportunities continue to abound, with more US $ 9.7 billion financial activity in the first half of 2021, the most active first half on record. In addition, the market is showing signs of maturation as funding begins to shift towards established players and growing consolidation is fueling the emergence of industry leaders.

“While technology adoption in real estate grew prior to the COVID-19 pandemic, it has become important to today’s leading players in real estate, buildings and premises,” said Ben Breslau, Principal Investigator for JLL. “Technology is at the center of the most important trends shaping business and real estate. This includes hybrid work, health, safety and sustainable development initiatives, all of which are in high demand. This is why we expect funding in this sector to break all records. year.”

“Our industry is right on the cusp of major changes driven by the widespread adoption of technology,” said Raj Singh, Managing Partner at JLL Spark, JLL Technologies’ global venture capital fund. “The trends we are seeing suggest that this is possibly the best time to invest in real estate technology. The ability to shape the industry in the future by supporting innovation has great potential for strategic change as well as a return on investment. ”

A landscape of evolving technology property (proptech)
Among 4th The industrial revolution and accelerated by the COVID-19 pandemic, new technologies have proliferated to take advantage of advances in computing power, analytics and connectivity. The number of real estate startups has grown rapidly over the past decade – from less than 2,000 to nearly 8,000 – as companies strive to apply these new technologies.

With this in mind, there has been a migration in finance and mergers and acquisitions (M&A) in favor of more established industry leaders.

Venture Capital and M&A Trends
Around 8,000 companies identified by JLL that provide technology solutions in a built environment have collectively collected over USD 97 billion equity financing over the past decade. Built environment startups can now be found in most countries around the world.

  • Consistent with the broader technology ecosystem, the US still accounts for the majority of company concepts and fundraising — 50% of companies that have received funding in the past decade. The cities and regions in the United States that have the largest number of proptech startups include: New York, San Francisco, Los Angeles, Silicon Valley and Chicago
  • Although China with significantly fewer companies, it is the second largest market in terms of funding, with more than US $ 16 billion has been rising since 2010. India, Singapore and Australia were the main markets for fundraising outside China v Asian-Pacific area… Top cities include Bangalore. Delhi, Singapore, Beijing and Sydney
  • V Europe, UK and Germany make up the bulk of fundraising in the region, followed by France, Spain and Sweden… Top cities include London, Paris, Barcelona, Berlin and Helsinki

While the pandemic has accelerated the adoption of new technologies, it simultaneously affected early-stage financing for companies in the real estate sector. The industry is also showing signs of accelerated maturation.

  • In accordance with Crunchbase, the number of early stage businesses fell 11% year on year in 2020. JLL found that venture capital funding for environmental building technologies dropped markedly and slowed to USD 13.4 billion in 2020, which is 19% less than USD 16.6 billion In the past year.
  • However, in 2021, investments accelerated, with the volume of financing in the first half of the year amounted to US $ 9.7 billion, compared with US $ 8.8 billion in the first half of 2020 and the most active first half on record.
  • As the sector develops, funding is also shifting towards more established companies, with most of the capital being invested in later rounds of funding and in products that have become widespread after COVID.
  • This maturation, combined with a more sophisticated fundraising environment, contributes to greater consolidation in the sector. In 2020, M&A activity reached record levels: USD 21.9 billion, and this is already higher US $ 18 billion until 2021.

Challenges and opportunities
COVID-19 has proven to be an opportunity to experiment and accelerate technology adoption in the real estate industry, with the potential to make buildings greener, healthier and more people-centered. Recent JLL poll found that among nearly 650 of the world’s top tenants and investors, green spaces are top priorities.

Occupants are taking a transformative approach to reducing carbon emissions by building resilience into their business models, with 89% saying resilience is becoming increasingly important to their corporate strategy. Real estate investors believe decarbonization can provide value and competitive advantage.

However, a number of challenges are slowing progress, including a fragmented technology landscape, lack of industry standards, privacy and security requirements, and more. Addressing these challenges will require closer collaboration and interaction between technology firms, real estate companies and the industries they serve, as well as national and city governments.

“Recent events around the world have highlighted the importance of reducing the impact of our industry, and leaders are taking this to heart,” Singh said. “Proptech startups and more established technology and real estate firms are at the forefront of solving industry problems – for the benefit of the world. Constant investment in these companies is an investment in the future of real estate. “

About JLL Technologies

JLL Technologies (JLLT) is a division of JLL, a global leader in real estate services, that helps organizations transform the way they acquire, operate, manage and use space. JLLT is a first-of-its-kind team of fast-growing technology builders and commercial real estate experts. Its broad technology portfolio of specialized solutions and leading venture capital firms surpasses industry needs for better business intelligence, usability, and smart building platforms. Find out more at www.jllt.com.

About JLL

JLL (NYSE: JLL) is a leading professional services firm specializing in property and investment management. JLL is shaping the future of real estate for a better world by using the most advanced technology to create lucrative opportunities, stunning spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is Fortune 500 with annual income $ 16.6 billion in 2020 operations in over 80 countries and a global workforce of over 92,000 as of June 30, 2021… JLL is a trademark and registered trademark of Jones Lang LaSalle Incorporated. For more information visit ir.jll.com.

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