U.S. PropTech M&A activity - Market Update

2019 was a record year in PropTech M&A and growth equity investment, in the United States.

According to GCA, equity and debt raised in US PropTech was up 69% year on year in 2019 to $9.0B. This reflects a continued momentum for the PropTech sector.

If you are interested by M&A or fundraising in the PropTech sector, we recommend that you read the full report.

What’s Hot?

GCA shows that investment happened in three sectors:

Residential Real Estate
Commercial Real Estate
Mortgage / P&C Insurance / Title

Real Estate Seller Leads – Lead Qualification

BoldLeads defines itself as “The easiest way to generate real estate seller leads and buyer leads”. It was acquired by PropertyBase. Why is that interesting? Because startups which can generate real estate seller leads, or qualify leads, are very attractive for investors.

Indeed, Property Portals know that in order to increase their revenue per lead from $3 or $5 dollar to hundreds or thousands of dollars, they need to re-think their approach to lead generation.

Which is why these M&A happened:

News Corp (owns Realtor.com) acquired OpCity, the market-leading real estate technology platform that matches qualified home buyers and sellers with real estate professionals in real time (Inman)
Axel Springer (owns SeLoger.com, leading French real estate website) acquired MeilleursAgents (Linkedin)
REMAX (real estate company) acquired First. Sales pitch? “Real estate agents miss 60% or more of the listings in their personal network. First makes it easy to connect with the sellers you know months before they list – or hear from another agent.”

iBuyers – The New Way To Sell Your Home

In order to increase the revenue per lead, some companies are going one step further. Known as iBuyers, these companies also generate seller leads. But their promise is “Sell your home the minute you’re ready” (Opendoor). Zillow (#1 property portal in the USA) also offers to buy your home. “Skip the hassle. Sell to Zillow”.

While Opendoor raised $300 million with a valuation at $3.8 billion (TechCrunch), Zillow’s market cap is $10.5 billion. So this is a big players’ game, and these companies (Property Portals) will likely keep buying startups able to generate Real Estate Seller Leads.

Digital Mortgage Lenders

Digital Mortgage Lenders are hot. Better.com closed a Series C at $160 Million. Their promise? “We’ve streamlined the mortgage process to eliminate fees, unnecessary steps, and time-wasting appointments. Our efficiency not only makes it easier to buy a home, it translates into the best rates available.”

Online mortgage lenders provide home shoppers with pre-approvals in a matter of minutes. Therefore, not surprising to see Better.com in Forbes’ list of “The Future Of Real Estate – Fintech“.

Is the mortgage part of the User Experience on mainstream property portals all around the world? No it is not. As an example, on the leading European portal Idealista.com, you can use a mortgage simulator (Lead Generation for Banks). Yet it’s reasonable to imagine that in the future, Property Portals will go one step further, integrating with Online Mortgage Lenders such as Better.com. After all, Zillow acquired Mortgage Lenders of America in 2018. So, who’s next?