September 27, 2022  //  BY Chris Flynn & Tucker Ryals

Proptech Innovation & Enthusiasm Are Still Running High

By Chris Flynn, Vice President, Head of Product and Strategy, First American Data & Analytics
and Tucker Ryals, Vice President, Strategic Relationships, Parker89

Earlier this month, we attended our first Blueprint Conference in Las Vegas, and frankly it was an eye-opening experience. If you’re not familiar with Blueprint, it is a relatively new venue that brings together proptech firms, startups, traditional real estate companies and VC investors. After attending the show, we are happy to report that, despite all of the uncertainty in the real estate market, the demise of SPACs and increased caution on the part of early-stage investors, innovation and enthusiasm are still alive and well within the proptech sector!

The vibe and the attendance at Blueprint were both strong, with roughly 800 companies showing a presence and more than 200 individual presentations over a three-day period. A number of our proptech and/or fintech clients and partners were in attendance, many doubling as presenters and speakers. There was also a strong representation from other First American groups and Parker89 portfolio companies.

Based on the presentations, there clearly is no shortage of startups that are ready to reinvent, if not disrupt, either the entire real estate market or at least specific niches. Many of the speakers focused on some aspect of the home ownership journey and how their solutions can eliminate time, cost or pain from the traditional processes. Examples included new approaches to home building (both SFR and multi-family), technology solutions to streamline the commercial real estate lending process, and several technology approaches to driving innovation in the real estate brokerage space. Another startup focused on using drones to inspect commercial real estate projects and accelerate draws for builders.

There were also larger tracks on data and digital innovation (something near and dear to my heart) and discussions on how and where VCs are investing now.

Each day there were a series of live demos on what was called the Innovation Stage. Some of these were full-on investment pitches; others were designed to showcase technology that is coming to market. Endpoint, a digital closing company and a division of our parent First American, took the stage to share the considerable progress it has made to date. Amanda Price, the head of strategy and growth at Endpoint, gave a seven-minute presentation on the scalability of digital title and closing, and how her company has taken a digital-first approach to a 150-year-old process.

Not all the speakers were startups. Nina Albert, the Commissioner of the GSA’s Public Building Services (PBS), and the nation’s largest landlord, was a keynote speaker. The PBS, she noted, controls approximately 8,800 assets and maintains 370 million square feet of workspace. Albert discussed how her agency makes its decisions on new technology and why the GSA views itself as a major investor in these new startups and as a consumer of proptech innovation.

Proptech financing – or more to the point the current scarcity of it – was a major theme throughout the conference. Spencer Rascoff, a founder of Zillow and more recently Pacaso, the co-ownership second-home concept, as well as several other startups, was interviewed on the current investment landscape. His take, and one that was echoed by other speakers throughout the conference, was that while proptech was a hot sector for VC investments in 2020 and 2021, it has been rapidly cooling and almost at the point of being frozen this summer. In addition to being a repeat founder, he runs a venture capital group as well, giving him a front-row seat to the sudden change in the funding environment.

According to the various presenters, some of the investment headwinds include the demise of SPACs, concern about higher mortgage rates’ impact on real estate, and concern over the possibility of a real estate recession. The consensus was that attracting investment is now significantly harder, and investors are focusing less on top-line growth, and paying much closer attention to profitability. So, startups are being asked to demonstrate not only the ability to scale, but a clear path to profitability or to being cash-flow positive.

Unless market sentiment changes and investment returns, several of the speakers said they could see scenarios where traditional M&A activity will increase as startups burn through capital and explore alternative solutions in the absence of additional funding rounds. This is not to say the money isn’t available, but there’s a considerably higher bar to be scaled today versus just a couple quarters ago.

Regardless of these headwinds, the mood and the level of enthusiasm at the conference was extremely high, and the vision and innovation on display was exciting. We’re already looking forward to next year’s Blueprint. If you're interested in learning more about how we can support your growing Proptech,  click here.

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