Glorax Infotech Research: PropTech Becomes the Most Promising Industry for Startups and Investors

27.08.2020

The results of research and an analytical report prepared by the experts of Glorax Infotech accelerator show that the global PropTech industry is the IT market leader by venture capital activity. According to preliminary estimates, in 2019 the volume of investment in startups dealing with the construction and real estate sector surpassed the 2018 level by 40.3%, totaling USD 20.2 bln. In 2020, as much as USD 28.3 bln will be invested in PropTech startups, with the average annual growth of venture capital investment to be 33% until 2023.

Glorax Infotech experts compared five IT market segments popular among venture capitalists for the volume of transactions over the past year. Besides PropTech (property technologies), the comparison also included FinTech (financial startups), FoodTech (nutrition and food delivery startups), EdTech (education startups), and MedTech (medical startups).

 

Comparison of Investor Activity in Different Segments of the Global IT Market

Segment of the Global IT Market

Investments in 2019, USD

Growth by 2018

Forecast for 2020, USD

CAGR Forecast

PropTech

20.2 bln* 

40.30%

28.3 bln

33% until 2023

FinTech

159.3 bln* 

24.80%

198.8 bln

24.8% until 2022

FoodTech

204.75 bln* 

7.20%

219.49 bln

7.2% until 2025

EdTech

18.66 bln

12%

N/A

N/A

MedTech

7.4 bln

N/A

N/A

Circa 6% until 2024

* Forecast values

Sources: Dsight, The Business Research Company, J’son&Partners Consulting, Mettari, Rock Health

In terms of investment growth rate against the 2018 level among the four industries, PropTech won the leadership with 40.3%: this is almost twice the growth of investment in financial startups. PropTech is also leading among the four industries by the average investment growth over the next few years with 33% CAGR.

So far, PropTech has not become a leader by investment money, ranked third among the top five selected industries. For example, in 2019 investments in FoodTech outscored PropTech ten times by the volume, reaching USD 204.75 bln. Much more money was also invested in FinTech last year, about USD 159.3 bln.

“PropTech owes its high attractiveness to the fact that for a long time construction and real estate were quite conservative industries, but the challenges of the modern global economy stimulate this area towards digital transformation. The interest of venture investors shows both the potential of this technological sector and the expected emergence of unicorns in the near future. All of the above trends are typical for the Russian PropTech market as well, so we are focused on the maximum possible development of the industry, its computerization and digitalization, and we have every opportunity to do this – financing, expertise and platforms for launching pilot projects,” said Andrei Birzhin, Head of Glorax Group, founder of Glorax Infotech accelerator.

The Russian PropTech market demonstrates high dynamics, too: investments in PropTech startups by specialized funds and developers in 2019 exceeded RUB 700 mln, with 10 deals concluded. Experts forecast that by the results of 2020, investment in new technologies for the real estate market can hit RUB 1.5 bln. This is equivalent to 100% annual growth.