There are more than 3000 PropTech companies in Europe. Many of them, founded after 2010, were first attracted to the large size of the real estate market, and the opportunity to transform an industry that has not felt the pressure to digitalise until recently.
Unfortunately, many young companies are not experiencing the exponential growth that they expected, or that their shareholders expected from them. Even though each situation is unique, major threads run through the PropTech industry:
- Many real estate owners do not feel the urgency to act (yet). Start-ups have often found that selling an innovative product to a conservative industry is time consuming and manpower intensive, limiting their opportunity to scale.
- The pain points addressed by some start-ups are too nichy, and that narrow focus may limit their growth potential. Not every PropTech solution is going to revolutionise its market.
- Incumbent players already serving the needs of the real estate industry have not been dormant either but have been defining and implementing their innovation strategies with reasonable success.
Fast forward to 2022: most PropTech owners now realise that they have to come to grips with deeply entrenched incumbents and double digit rather than triple digit revenue growth. What are the options moving forward?
Ultimately, each start-up will have to embark on one of the following paths:
- Remain a slow growing and small business, when the business is already self-financing, working capital requirements are low, and current shareholders are not under pressure to allocate their time and their money to more profitable endeavours.
- Raise additional funds to finance the current and future growth, both from a product portfolio and a sales channel perspective.
- Sell to a larger player that has a white spot in the area covered by the young company but would need too much time to develop the innovative solution internally.
Investaura is at the forefront of the digitalisation of the RE industry in Europe and has recently been mandated by multiple PropTech and their shareholders to assist them in their exit strategies. Feel free to contact us directly to discuss how we could help.