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By James Dearsley

Co-Founder, Unissu


PropTech Today: uncertain times to accelerate mergers and failures

We live in uncertain times. That I do not need to say to anybody. I am writing this piece aboard my usual Tuesday morning trip to Belfast to see our team.

Seems a little bit pointless seeing as we have suggested they all work from home, but I will see a few of them for sure.

Each week, the count of facemasks increases. The looks of apology if someone sneezes, likewise rises. All these things are synonymous with the times we are currently living through.


As Radio 4 put it yesterday, if you are a teenager, save the newspaper clippings (perhaps Evan Davis showing his age there), remember these moments as these are a unique social experience, one hopefully you will not see the like of again.

Without wanting to dumb down this column, the impact is being witnessed everywhere, and the property sector is no different. We have seen share prices tumble as the market reacts (though I would suggest central London agents will do relatively well at the high-end as the market looks for security in these times).

We have seen MIPIM, the annual property social event in the South of France, postponed (why they didn’t cancel it, I don’t know) with close to 30,000 real estate professionals now at a loss. I am increasingly expecting to see FUTURE: PropTech be postponed too.

Yes, this is sad because the social gatherings are being canned but spare a thought for those impacted on the periphery. The exhibition companies, stand builders, carpet layers, temp staff used to man the various cubicles.

Speaking bureaus being used for hiring keynote speakers, the keynote speakers themselves, the AV teams, the conference organisers and support staff.

No one is going to do well out of this. Or are they?

With Covid-19, we are moving from the containment phase to the delay phase.

With PropTech, I would say we are moving from the growth phase to the consolidation phase. Covid-19 will only accelerate this movement and will start to show key companies being true leaders in the future of this industry.

We have long suggested consolidation is coming. With 8,000 businesses in the sector, there are going to be several ways this will happen:

- mergers and acquisitions

- failures, of which there are a few possible ways this will happen:

• Running out of money as investment dries up

• Business model unproven

• Founders fall out

Let’s first look at failures and some recent news. Hostmaker, the short-term rental management firm, announced it was putting itself into administration.

Despite raising over £30 million, it can’t carry on. This is a serious failure and it found obvious difficulty gaining and maintaining clients.

It is a bit of validation for my own thought process, perhaps. If you are London-based, you will no doubt have seen the Hostmaker tube adverts.

I simply could not understand why it was spending so much money - and I mean these adverts were ever-present - on tube advertising. It was crazy in my view and this has perhaps been proven. 

What is certain at the moment with the world of investment, unless you are a strong business with proven revenues, is that you will find it more difficult to get funding.

Days of PropTech firms commanding crazy valuations and commanding huge VC investment are long gone. A combination of serious failures, think WeWork, and a huge move to invest in safe bets given the recent financial situation, means VC money is going to be hard to come by.

Moving on, M&A is bound to increase. In fact, I would suggest it will be one of the most important elements of the next 18 months. Again, however, this will take several forms:

1. PropTechs merging or partnering with PropTechs

2. PropTechs buying PropTechs

3. Property companies buying PropTechs

In these last few weeks, we have seen examples of this starting to come out. Take a look at Matterport partnering with VPRM. Matterport, one of the early PropTechs and a serial acquirer of businesses with its virtual viewing and software platform, partnering with VPRM, the virtual staging business.

Just wait and see. With all this talk of M&A, it is all about picking the winners moving forward. Even in these difficult times, and despite what I mentioned above, there are some PropTechs obtaining some seriously high funding rounds.

Take this last week, we have seen Goodlord securing £10 million. We have also seen an Austrian firm, Plan Radar, securing $30 million. This backs up my earlier point. Strong businesses with solid foundations and a strong revenue stream will start to pull away now.

VCs will back them given the fundamental underlying strength of the businesses. They will all enter the next stage of their PropTech journey and the management will have to deal with new challenges.

I mentioned we are living in uncertain times. This isn’t just limited to the PropTech stage either. Just look at the news of OTM and the news of Ian Springett being fired. Alternatively look at the slowest growth at Rightmove ever. There is a classic contradiction here given its dominance and profitability.

Personally, I feel it is a long, slow death for Rightmove unless it takes some huge decisions in the next 12 months. It could be an ideal time given the market troubles ahead. It has serious cash reserves, market share and brand awareness with consumers. A huge risk in the eyes of its short-term viewing shareholders…

As my plane ride comes to an end, and I am being asked by a member of the cabin crew to shut my laptop, I reflect on a rather crazy two weeks in this world.

As this column moves to a bi-weekly article, I wonder just how it will evolve given how much news there is at the minute?

We are in a crazy time as the industry evolves but also in how we see society changing at a rate we couldn’t have expected a month or so ago.

Will be interesting to see where we are at two weeks from today…

*James Dearsley is a leading PropTech influencer and commentator, and is co-founder of PropTech platform Unissu. You can follow James on Twitter here.


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