VCs pile into startups in the face of global market uncertainty

VCs pile into startups in the face of global market uncertainty
VCs pile into startups in the face of global market uncertainty. Image source: Unsplash

The startup space is bucking the wider market’s downward trend, with investors seeking security in investing in companies that will shine brighter, faster, once the market turns. The agility and flexibility of well-structured startups offer investors the opportunity to invest in development opportunities that can be rolled out to solve for the needs of consumers and businesses, rather than pouring money into companies that will simply return to their established ways of working when the market turns.

In Africa, the value of the startup space is set to exceed $7 billion and while 60% of that is attributed to fintech, proptech is gaining momentum as an investment space to watch. Global investment in proptech topped $32 billion in 2021, up 28% from a dire, COVID-hit 2020 and 3.23% up from 2019, according to the Center for Real Estate Technology & Innovation’s 2021 Real Estate Tech Venture Funding Report.

“Proptech is democratising an industry that covers one of humanity’s essential needs – everyone needs a roof over their heads,” says Flow Co-Founder and Co-CEO, Gil Sperling. “The real estate industry was being left behind in the world of online transactions because of their complex and expensive nature – it’s a massively-fragmented space”.

Because of Flow, 10 million of the 26 million South Africans who spend upwards of four hours a day on social media platforms have seen ads for properties in the areas they’re searching and in the price bracket they can afford, opening up the market and bringing the property industry into the 21st Century.

“The online audience in South Africa has grown immensely over the last two years – out of necessity – so brands have been working hard to meet consumers online and make them more comfortable with transacting there,” says Daniel Levy, Co-CEO and Co-Founder of Flow. “Proptech is one of the fastest-growing spaces in South African tech right now, because consumers are using the online space to meet more of their needs – and an essential like property is a huge one”.

Sperling says that if Flow is a barometer of the growth of adoption of proptech in SA, things are looking bright. “We’re seeing 30% month-on-month growth, with a 10x growth in property-related social spend over the last 12 months,” he says. “Those are the kind of numbers that make investors take notice of a sector”.

Metaprop’s Year-End 2021 Global Proptech Confidence Index showed that 71% of investors expect to make more proptech investments over the next 12 months, up from 54% six months ago. 49% of proptech funding went to residential tech, with just 7.6% of that investment focusing on commercial owners and tenants.