Wednesday, February 21, 2024

Proptech startup Funding Report 2019

$25.2 billion

Startup Funding


Number of deals
( total deals)

$34 million

Avg Deal Size

Proptech startup Funding in 2019 by HexGn

According to the HexGn Proptech startup funding report 2019, the real estate sector had a good year in 2019 with strong growth in funding.

The Proptech sector was the fourth largest sector in 2019 and moved up from being the seventh largest funded sector in 2018.

The startup funding for Proptech startups increased by 18% in 2019 and attracted $25.2 billion compared to $22 billion in 2018.

However, the number of deals went down by 7%. While, last year saw a total of 1076 means in 2019, the number of deals was 1004 in 2018, driving up the average deal size from $26 to $34 million.

According to the HexGn Proptech startup funding report 2019, Co-working, Co-living, Co-sharing was some of the buzzwords for the Real Estate startup scene in 2019. This was on the back of a home automation wave before this. Sharing, rented accommodation and sensitization, means that real estate will continue to be an area to see continued funding baring short term disruption due to COVID-19.

Proptech Startup Funding Across Regions In 2019

According to the HexGn Proptech startup funding report 2019, North America emerged as the top sector for real estate in 2019 with a surge in funding to the tune of 65%. The sector went on to attract a total of $19 billion compared to $11 billion in 2018 the number of deals fell by 12% leading to an increase in the average deal size from $26 million to $51 million.

Asia was next in terms of funding. It was not a very happy year for the sector in 2019 with total funding dropping by 29% and the number of deals down by 16% compared to 2018. The sector saw a total funding in Asia of $5 billion compared to $7 billion in 2018 the fall in overall funding and a less corresponding fall in the number of deals meant that the average deal size dropped. While in 2018 deal size was $41million, it dropped to $36 million in 2019.

According to the HexGn Proptech startup funding report 2019, Europe also had a tepid 2019 for real estate funding. The sector attracted $2 billion in 2019 compared to $3.4 million in 2018, a fall of 47%. However, going against the trend in other regions the number of deals actually went up in 2019. The number of deals increased by 15% compared to the previous year. This lopsided trend meant that the average deal size registered a steep fall from $17 million to $ 8 million in 2019.

According to the HexGn Proptech startup funding report 2019, the grouping comprising Oceania, South America and Africa did not see much activity. The region attracted the total funding of $530 million compared to $327 million in 2018, an increase of 62%, however the number of deals fell by 15% during the same period leading to the average deal size increased from $9 million to $15 million.

Real Estate startups showed a weak investor demand across regions except in North America, where the sector enjoyed a strong showing in 2019. The steep funding increase in North America meant that the share of funding of North America to the global funding went up to 72% compared to 52% in 2018.

Most of the funding increase in this sector came from the huge fundraise of WeWork in 2019, when they raised a total of $11.75 billion across a number of deals. Baring that the funding would have dropped slightly if not offset by a similar funding in 2018 from WeWork.

2019 Startup Funding Size and Stages

According to the HexGn Proptech startup funding report 2019, the funding increase in Real Estate startups was mainly in the late stage deals. These had a very buoyant year with an increase in the number of deals as well as increased funding. While the number of deals rose by 53%, the finding in late stage registered an increase of 45%.

The contribution of a few large deals cannot be understated along with their impact on the average deal size at the top end in terms of funding. This was offset by a particularly bad year for early stage deals in this sector. While the funding decreased by 46%, the number of deals too fell by 30%.

Seed/Angel stage saw funding increase marginally by 9% to reach $535 million from $488 million.

Total funding in early stage deals was about $3 billion down from $6 billion in 2018. Showing continuous appetite from real estate community to fund new and upcoming technologies in Proptech.

Late stage funding was $22 billion in 2019 up from about $15 billion in 2018.

In funding categories it is worthwhile to point out the astronomical funding raised by debt financing. Debt financing is a recent phenomenon in startups as the companies approach IPO rounds.

According to the HexGn Proptech startup funding report 2019, seduced by a huge ingress of funds on a successful IPO, startups are increasingly looking at debt financing as a way to improve ratios and numbers before debuting on the bourses.

However, real estate is probably the only sector where close to 33% of the value of deals is channeled through debt financing. Which in itself is noteworthy, given the equity and low risk driven growth models that startups espouse from inception.

The total money raised via debt financing was $8.4 billion compared to $2.6 billion in 2018. The other favorite emergent for pre IO rounds are secondary market deals.

These deals are the new markers for valuation guidance and provide a way in for investors willing to take the risk to make a quick buck.

We foresee secondary market deals increase as more and more tech startups prepare to access the market. Secondary market deals recorded a total raise of $4 billion in 2019 compared to just $150 million in 2018.

The biggest change was seen at the top, while the number of $1 billion plus deals reduced from 6 in 2018 to 5 in 2019, the total money raised by the deals increased in 2019 from $9 billion to $12 billion and increase of $ 3 billion over the previous year.

According to the HexGn Proptech startup funding report 2019, the next big change was in the $100 million to $500 million range with the number of deals increasing from 26 to 30 and the fund raise increasing by $2 billion to reach $6.5 billion in 2019, compared to $4.5 billion in 2018.

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