Future City: double venture capital
Venture capitalists poured an unprecedented $4 billion in equity funding into the proptech sector in the first quarter, doubling their bets even as rising interest rates and ensuing market turmoil resulted in the names of the technology.
The quarterly total, an all-time high, was a gain of more than 30% from the Q1 2021 sum – and last year proved to be a banner year for proptech fundraising.
Investors have retained faith in the sector’s adoption and long-term growth despite moderating private market valuations and the dramatic sell-off of new public names in recent months, investment bank Keefe, Bruyette & Woods said. in a report. Proptech stocks underperformed sharply in the first quarter, falling an average of 20%.
There’s a silver lining to the recent decline: the broad “reset” in corporate valuations has created conditions for much-needed consolidation in a sector that now has several thousand startups in its ranks, KBW said. Recent M&A deals have included private companies looking to expand, public companies looking to expand their offerings and “technology-enhancing deals by traditional real estate operators,” he said.
Most investors expect mergers and acquisitions to accelerate over the next 12 months.
Bruises and cuts
Rising interest rates have been particularly difficult for mortgage lenders, who are dealing with much weaker applications and refinances as well as a growing number of cash buyers.
So far this year, there have been layoffs at South Carolina-based Movement Mortgage, and a few controversial rounds of them at New York-headquartered Better.com.
Now, Blend Labs, a San Francisco-based digital mortgage lender, is laying off 200 people, or about 10% of its staff, to cut $34.5 million from its annual payroll, according to a regulatory filing.
Affected Blend employees will receive at least 18 weeks of pay and continued health insurance and other benefits, which will cost the company about $6.7 million, co-founder and CEO Nima Ghamsari said.
Fannie Mae analysts expect lenders to refinance $889 billion in 2022 and $558 billion in 2023 – a sharp drop from the $2.8 trillion they processed in 2020.
Room by room
Modular construction has been around for decades, but using digital technology to streamline pre-engineered interior constructions is uncharted territory.
Falkbuilt, a building technology company claiming to be the first and only to do so, has raised C$35 million in a funding round led by RET Ventures and Stephens Capital Partners, bringing its total funding to approximately 65 million Canadian dollars.
CEO Mogens Smed says the company’s offering is cheaper than any existing modular solution, and its interiors are more precisely designed and easier to install.
Founded in 2019 and based in Calgary, Falkbuilt has approximately 400 employees and operates globally. It has built regional distribution centers in New Jersey, a virus testing station at an airport in Bermuda, a research station in Antarctica and 10,000 square feet for Morgan Stanley in Mumbai.
The company will use the new funds to shore up inventory that has become increasingly expensive and difficult to obtain due to supply chain disruption, Smed said.
Public proptech companies generated $20 billion in revenue in the fourth quarter, a 112% year-over-year increase.
Measurabl, a San Diego-based company that helps real estate companies manage, benchmark and report so-called ESG – environmental, social and governance data – has purchased Boston-based Hatch Data for an undisclosed amount.
Hatch Data, a “smart buildings” platform that aggregates information from meters, building systems and IoT sensors, will bring real-time property-level analytics to the Measurabl dashboard.
The commercial real estate sector is responsible for nearly 40% of global greenhouse gas emissions and is under pressure to reduce its impact as the world seeks to transition to a net-zero carbon economy. The US Department of Energy estimates that commercial and government buildings use 35% of the nation’s electricity and generate 826 million metric tons of carbon emissions annually.
There are apparently new emissions benchmarks and regulations every day, said Aaron Barranco, Measurabl’s senior vice president of “customer success,” during a presentation in New York in April.
“There should be a virtuous flow of data from the meter to the market,” he said. “There should be a place where you can access that data and report it — not just to those benchmarks, but also to investors.”
• PassiveLogic, a startup that claims to have created the first fully autonomous building systems platform, has secured $15 million from Brookfield.
• RentRedi, a property management software provider for landlords, raised $12 million in a Series A round.
• WeWork has partnered with real estate software company Yardi to help companies design and manage their flexible work programs.
• Lara Cumberland, head of M&A integration at Meta, has left the company to take on the role of chief operating officer at proptech unicorn Pacaso.
• Splitero, a company that allows homeowners to trade their home equity for a lump sum cash, raised $5.8 million in seed funding.
• Requity Homes, a Toronto-based startup that offers a rent-to-own program for landlords, raised C$1.2 million in pre-seed funding.
• Rental management software startup Alfred was launched in Charlotte, marking its expansion into North Carolina.