Funding for proptech firms has plummeted by nearly 70% says expert
Andrew Stanton tells The Neg that the market slowdown and the demise of Purplebricks have put off some investors.
A leading proptech figure has claimed that funding for tech firms servicing the residential property market has slumped by 68% over the past year as the UK’s economic difficulties have spooked some investors.
Andrew Stanton says other factors that have seen funding weaken include the sale of Purplebricks for £1, which many consider to be proptech’s lowpoint since the term was coined during the noughties, largely becuase the agency often presented itself to investors as a ‘tech-led’ platform.
Once valued at over £1 billion based on its share price, the agency was recently sold to rival Strike, shocking many investors who had taken it for granted that Purplebricks had grabbed enough market share to give it a secure financial future.
Boom years
Stanton says that while many proptech firms are yet to break even, the millions of pounds raised during the boom years prior to Covid are keeping them going, putting off any mass collapses within the sector for the time being.
But the former agent turned tech expert says more proptech start-ups are now struggling to get second stage funding to develop their products as the housing market struggles.
“Time was when big investors were chasing any proposition that claimed to disrupt the market but really it’s been the tech firms that improve parts of existing processes like conveyancing or referencing, for example, which have done best rather than companies like Purplebricks which said they’d replace huge parts of the sector wholesale via ‘disruption’,” says Stanton.
“I think persuading the public or estate agents to radically change the traditional ways of buying, selling or renting homes in a relatively short period has proved more difficult than many investors imagined – so they’re warier now of big claims of disruption.”
