Proptech startups are transforming the commercial real estate industry with innovative solutions that enhance efficiency, sustainability, and profitability. But how do you decide which ones are worth investing in? Here are some criteria to help you evaluate the potential and performance of proptech startups.
The first thing to look for in a proptech startup is how well it solves a real problem or pain point for its target customers. Does it offer a clear value proposition that differentiates it from competitors? How big is the market opportunity and how fast is it growing? How many customers and users does it have and how loyal are they? How much revenue and profit does it generate and how scalable is its business model? These are some of the questions that can help you assess the market fit and traction of a proptech startup.
As a proptech cofounder, I believe the investment and valuation strategy should be very different according to the target company's stage of development. You can't ask how much revenue the company is generating if you are trying to invest in early-stage pre-seed companies. In this case, always look at the quality of the team and the market size. If the market size is big enough, and you think the team have capability of tackling main problems in the market, then it's a positive sign. After Series-A round, numbers definitely matter. It shows whether the team has found their target persona and proven their thesis. Focus on scalability from this point.
LOL ... I think this is kind of a lame discussion for commercial real estate? Business evaluation is completely different than commercial real estate evaluation. The same Principles apply here, as any Shark Tank evaluator would be using. Market: Is there a big enough audience? Is it growing? Product/Service: Is it unique, useful, and defensible? Business Model: Can they make money consistently? Financials: Are their numbers realistic and achievable? Team: Are they capable? Do they have the skills and passion to succeed? Bottom line! Valuation: Is the asking price fair for the investment? Or will the operation be able to attract investors, or sustain its current operations based on its business model and financial structure.
The Swiss PropTech Report 2022 found out that there are roughly 15 key success factors that define the success of a PropTech, and thus its potential to raise investments. The top three factors are: its need in society / the problem it solves, the strength of the core team as well as its scalability. Coincidently, these three factors are also among the most important factors investors look for in a PropTech. Even more importantly when investing: there should be a long investment horizon and investors should be aware that PropTech innovation takes longer that innovation in other industries.
The second thing to look for in a proptech startup is the quality and diversity of its team and culture. Does it have a strong and visionary founder or co-founders who can lead the company through challenges and changes? Does it have a balanced and skilled team of developers, designers, marketers, salespeople, and advisors who can execute the vision and strategy? Does it have a positive and collaborative culture that fosters innovation, learning, and growth? How does it attract, retain, and motivate its talent? These are some of the questions that can help you evaluate the team and culture of a proptech startup.
Choosing the right CEO and the right personell in general is also important per company stage. Visionary CEOs are great in the early stages to inspire vision and help align staff to achieve the unachievable. The more the company grows the more important it is to engage everyday people, which sometimes means a new CEO, a new board or new staff altogether. The same thing applies to company culture. While it must be tight and like a family at the beginning, culture should also evolve and adjust to the stage the company finds itself in.
When looking into a early-stage pre-seed round proptech company, you need to focus on whether the team has all people to cover three major aspects -Someone to make decision -Someone to build the software -Someone to sell Also focus on the background of the co-founders, whether they have relevant industry experience and vision to tackle the right problems in the industry. When evaluating companies from Series A stage, focus on how co-founders have found right people in their team that have similar vision, mentality but complementary skill sets.
Das Team und die Unternehmenskultur sind einer der am meisten untersch?tzten Faktoren bei PropTech-Startups. Es reicht nicht aus, nur eine:n vision?re:n Gründer:in zu haben - auch das unterstützende Management bzw. Gründerteam muss haargenau "passen". Es bringt nicht viel einen vor Ideen sprühenden Gründer zu haben - die Umsetzung im Gesch?ftsalltag und der Aufbau von Kundenbeziehungen ist noch einmal so wichtig, wenn nicht sogar noch wichtiger als die reine Gesch?ftsidee. Hinzu kommen auch n?tige kommunikative F?higkeiten nach innen wie aussen, die ben?tigt werden, um ein Startup gross, nachhaltig und erfolgreich werden zu lassen. Startups dürfen nicht zur One-Man-Show oder One-Woman-Show geraten.
The third thing to look for in a proptech startup is the sophistication and functionality of its technology and product. Does it use cutting-edge technologies such as artificial intelligence, blockchain, cloud computing, or internet of things to create value for its customers? Does it have a robust and secure platform that can handle large volumes of data and transactions? Does it have a user-friendly and intuitive interface that enhances the customer experience? How does it test, validate, and improve its product based on feedback and data? These are some of the questions that can help you assess the technology and product of a proptech startup.
Digging into the technology and sophistication level itself is important, but more important thing is to evaluate the team's capability to test their hypothesis in the market quickly and making appropriate changes in their product. See how the team is reacting to clients' feedback. See how the team throws their initial ideas to the market, and improve their product with agility. See how fast and frequent the team can repeat the above process.
Companies should also ask themselves how technologies, products and services can be protected. Are there any internal defense mechanisms that may be implemented? Are there legal mechanisms that may apply and help protect products and services?
Technologie und Produkt bei einem PropTech-Startup müssen zum einen auf der H?he der Zeit sein, zum anderen einen wertvollen Kundennutzen darstellen, um in der Marktbreite reüssieren zu k?nnen. Ein digital umgesetzter (bislang analoger) Prozess etwa im Management von Immobilien sorgt vielleicht für einige Kundenanfragen. Jedoch erst ein digitaler Prozess, der die bisherige Herangehensweise wesentlich effizienter, intelligenter und schneller macht, wird dazu führen, dass Branchenakteure das Produkt unbedingt haben, kaufen und implementieren wollen. "Managementprozesse neu denken" lautet hier die Devise für die Digitalisierung und den gesch?ftlichen Erfolg dank PropTech-Startups.
The fourth thing to look for in a proptech startup is the impact and sustainability of its solution. Does it contribute to the social and environmental goals of the commercial real estate industry, such as reducing carbon emissions, improving energy efficiency, enhancing accessibility, or promoting diversity and inclusion? Does it have a clear and measurable impact strategy that aligns with its mission and vision? How does it balance its financial, social, and environmental performance? How does it cope with regulatory, ethical, and reputational risks? These are some of the questions that can help you evaluate the impact and sustainability of a proptech startup.
PropTech-Startups k?nnen heute entscheidende Hilfe und Unterstützung zum Erreichen von Nachhaltigkeitszielen geben und zum grossen globalen Ziel des Netto-Null bis zum Jahr 2050 gem?ss dem Pariser Klimaschutzabkommen. Viele PropTechs haben sich mittlerweile mit der Definition und der Analyse von ESG-Zielen besch?ftigt und leisten hier wertvollen Input und Impact. Beispielsweise bei der Datenaufbereitung, der Datenanalyse und der Datentransparenz in der gesamten Bau- und Immobilienbranche. Dies hilft auf dem Weg der Dekarbonisierung und auf unternehmenseigenen CO2-Absenkpfaden. Wichtig sind die Zahlen zudem für Reports und Gesch?ftsberichte, um Vergleichbarkeit herzustellen und gesellschaftliche wie unternehmerische Ziele zu erreichen.
The fifth thing to look for in a proptech startup is the funding and valuation of its business. How much capital has it raised and from whom? What are the terms and conditions of its funding rounds? How does it use its funds to grow and scale its business? How does it measure and communicate its progress and milestones to its investors and stakeholders? How does it compare to other proptech startups in terms of valuation and growth rate? What are the exit options and scenarios for its investors? These are some of the questions that can help you evaluate the funding and valuation of a proptech startup.
Viele PropTech-Startups, die für ihre Gesch?ftsidee Kapital einsammeln müssen, sollten ganz genau wissen, welche Investoren in Frage kommen und mit welchen Intentionen diese ihr Geld investieren. Business Angels, etwa erfahrene Akteure, die in der Immobilienbranche jahrzehntelang gearbeitet und Erfahrung aufgebaut haben, k?nnen zus?tzliches Know-how mit in das Startup einbringen. Family Offices ebenso, wenn diese bereits in der Branche aktiv sind. Gleiches gilt durchaus auch für Fondsgesellschaften. Jedoch sollten PropTech-Startups hier auch auf den Anlagehorizont der potenziellen Kapitalgeber und Partner achten. W?hrend Business Angels und Family Offices sich h?ufig l?nger binden, werden Fonds nur "auf Sicht" (3 bis 5 Jahre) investieren.
The sixth thing to look for in a proptech startup is the vision and ambition of its founders and team. Does it have a clear and compelling vision of how it wants to change the commercial real estate industry and the world? Does it have a realistic and ambitious plan of how it will achieve its vision and goals? Does it have a strong and resilient mindset that can overcome obstacles and adapt to changes? Does it have a passion and curiosity that drives it to learn and innovate constantly? These are some of the questions that can help you evaluate the vision and ambition of a proptech startup.
Try to see whether the team has both long term vision and short term plans to survive. See whether their ambition something bigger than commercial real estate industry itself. For example, Airbnb started as a hospitality real estate company, now its a more than that, its a culture. Find the team that can create new phenomenon and new culture.