What will happen to the growing CRE start up scene?
Hard to avoid all of the talk about the pending tech crash these days. Everyone seems to be saying that it’s not a question of if, but when. While I’m clearly not qualified to contribute my own analysis of the tech sector, having only been in it for about two years, I do have some perspective on market corrections though, having been running my own companies for the past 25 plus years. Three simple takeaways I would add to that conversation: 1.) nothing lasts forever 2.) cycles are real and 3.) corrections are healthy if you’re on the right side of it! If nothing else, those are some of things that I’ve learned along the way.
The topic of a tech market correction got me thinking about what type of impact it would have on the bourgeoning real estate tech space. It's no doubt the youngest and probably smallest in terms of startups and where VC and angel dollars are investing these days, however, it’s a really exciting time for this sector and there is a real momentum taking place.
Just look at the recent funding examples led by Fundrise, View The Space, Compstak, Honest Buildings, 42Floors, Storefront and Realty Mogul and it’s clear that this is the most exciting time perhaps in the history of the CRE tech sector. What the smart money has realized is that the commercial real estate space is the last frontier that tech has not disrupted and the opportunities to make a real impact are huge!
Once the residential side of the industry really exploded in tech with sites like Zillow, Trulia and Redfin, it was only a matter of time till the focus shifted to commercial. There are so many amazing things happening in the space these days, from an efficiency and innovation point of view, that it would be a real shame if the momentum was lost due to an overall correction in the tech investment world.
From an analytics, marketing, presentation, news :), search, financing and valuation perspectives, tech is now impacting every single aspect of the CRE sector.
I would hope that whoever is considering investing in CRE tech would then consider the following IF a correction of sorts happened to the larger tech sector:
1. The CRE tech world is still in its infancy and therefore the upside is enormous
2. Only a tiny fraction of the VC and institutional monies allocated to the tech sector have actually hit the CRE space, meaning that those dollars already in won't be impacted
3. This truly is the golden age of tech in CRE and those that get in early will be the ones to make the most impact
5. There are so few actual sites competing, so when you compare it to the overall tech sector, those that have already launched or about to launch are going to get real traction in this space.
So, I guess my real message is that if you are thinking of investing or starting a new site in the CRE space, drown out the naysayers and come on in. The market is wide open and the opportunities are huge, despite what you may read about tech overall.