Every ecosystem has multiple stakeholder, and the success of the ecosystem depends on how each participant supports the others. The Research team of HexGn conducted its own study with startup companies and has identified multiple areas of support that entrepreneurs seek from the core domain industry. Although it is assumed in general that ‘Investment and Finance’ forms the top most need of startup companies, the reality is a lot different. PropTech startups place greater importance to ‘Access to Customers’ and ‘Business Expertise’ over investments.
As part of the Global PropTech Time 2019 survey, HexGn asked the real estate industry, how they would want to engage with, and support, proptech startups. The target of the current section is to bridge the need-support gap. Almost 50% of the real estate industry is already engaging or looking forward to engage actively with proptech players, and these companies have identified more than 4 ways, on an average, to support the proptech industry.
Access to Customers
According to the Global PropTech Time 2019 survey, almost 17% of PropTech startups struggle to get access to customers. Real estate industry can help the proptech startups by connecting them to the industry players, give them pilot orders and being a customer themselves by using their services. While almost 53% of real estate industry respondents expressed their eagerness to use proptech services, this may not be the first step that the industry would take. Around 49% of the industry are willing to give pilot orders to proptech startups and this is an encouraging statistic. However, the real estate industry can start by outsourcing problem solving to proptech startups. Around 38% of the industry showed eagerness in this endeavor, but more of the industry must do this either directly, or through joint events. Such events may also be a platform to connect proptech companies to other industry players, which is a way around 46% of the real estate respondents plan to engage with proptech.
According to the Global PropTech Time 2019 survey, almost 16.5% of Proptech startups realize that they fail to make a mark because of the lack of business expertise in their team. Starting and operating a venture demands a high business acumen in every phase – from validating the need/solution, to understanding whether the product is a market fit. Startups usually join accelerators to gain the necessary business knowledge, however, they prefer to join accelerators that are started or supported by real estate companies. Only about 41% of the real estate industry respondents expressed their willingness to associate with accelerators. Proptech startups also seek direct mentorship from real estate companies but only around 42% of the respondents see that as a way of engagement with proptech. Real estate must engage more in this front, as a result such companies will have better access to products even before the market does.
Investment & Financing
According to the Global PropTech Time 2019 survey, 15% of the proptech consider investment and financing as their biggest need. Around 43% Real estate companies have expressed willingness to support by directly investing in proptech companies, while 39% have expressed interest to invest in proptech focused VC funds. However, such direct approach to solve the financial needs of startups will yield limited or no returns in the long run. According to a research conducted by HexGn, less than 10% of proptech startups that raised early-stage funding got to the Seed A rounds. Real estate companies should therefore be a part of the proptech value creation process at early stages and thereby increase the chances of a startups to secure funds in the coming years. Mentorship and guidance can be in the form of problem validation and product design guidance. Close to 42% of real estate respondents have expresses interest in mentoring proptech startups.
PropTech startups have felt the need for technical expertise, and this is rated as a need higher than corporate facilities and talent pool. Despite being experts in technology, startups often fall short of the domain specific technical know-how. Around 57% of the Global PropTech Time 2019 survey respondents have associated the slow tech adoption in the sector to inappropriate products due to lack of real estate related knowledge among proptech founders. While having a domain expert in the team is important, proptech companies would find it difficult to on- board senior real estate professionals in their team due to compensation and cost concerns. This is where real estate companies can play a key role by partnering with proptech companies. While 52% of real estate respondents have expressed interest in this mode of engagement, there is a need for more to come forward. Participating in accelerators is another way in which real estate can share deep expertise with prospective technology partners.
Access to Network
According to the Global PropTech Time 2019 survey, 11% of the proptech startups thought that their venture could do much better if real estate supported with a greater access to their network as well. The network may be direct players in the real estate market, who may not end up as customers but can share their point of view during the product development. The network could also be service providers who may on recommendation extend corporate rates and prices for their services, which the startup may not get otherwise. Legal and IT services are some examples. Around 46% of real estate respondents wish to engage with proptech players by connecting them to industry network.
Access to Talent Pool
Apart from real estate companies, there are several other external players, such as government and academia that can help build the proptech ecosystem. Proptech startups, like any other new venture, have experienced the need for quality talent pool. The struggle of finding talent can also get much easier when all the stakeholders involved in the system work towards increasing awareness of the proptech segment and the multitude of opportunities it has to offer.
While it cannot be denied that it is high-time that property technology makes a bigger splash in the real estate industry considering the arrival of the fourth industrial revolution, it can only happen with the support of the real estate players. When a real estate company makes itself a part of a proptech startup venture’s journey, it speeds up the process of converging both the areas.