Despite inflation, rising interest rates, geopolitical instability and the numerous other global factors that affected equity markets across the board fourth quarter 2021 and continuing into first quarter 2022, investor confidence in the proptech sector remains strong, with 71% of investors expecting to invest in more proptech companies in the next 12 months, according to venture capital firm MetaProp’s Year-End 2021 Global PropTech Confidence Index, sponsored by PwC.
However, startup confidence has faltered, with 73% of startup founders believing that it’ll prove to be harder to raise their capital. As opposed to the SPAC and the IPO focus of 2021, respondents expect 2022 will bring the wave of mergers and acquisitions..
The Index digests the latter half of 2021, offering the perspective from notable investors and startup founders worldwide. Investor confidence hit 9.3 out of 10, consistent with yearend 2020, tying the highest investor confidence to-date. The startup confidence dropped to 7.4 out of 10, receding from last year’s all-time high 8.3 out of 10. For investors, this can be attributed to the slight edge toward “investor-friendly” fundraising climate, following the multi-year “founder-friendly” one, that emerged due to downward pressure on public company valuations. For startups, this is indicative of the shifting macroeconomic climate and maturing sector, creating slight uncertainty amongst founders.
“Interestingly, respondents continue to see pathways for startup exits and realizations. As opposed to the SPAC and IPO focus of 2021, survey respondents expect that 2022 will bring a heavy wave of PropTech mergers and acquisitions. Also, we note an increase in respondents’ interest in single-family, Web3, and ESG-related technologies,” wrote MetaProp Co-founder and Managing Partner Aaron Block.
Nearly all investors (96%) expect COVID-19 to continue to accelerate the adoption of proptech throughout the real estate industry. In addition, 85% of investors shared that proptech companies that are in their portfolio are performing above or meeting expectations in terms of the customer growth, Investors expect to invest in at least eight startups this year, and are most interested in the single family sector.
