Real Estate Tech Venture Capital: Impact of COVID-19 on Venture Funding
The past sixty days have been unlike any other in real estate tech venture capital. Since April, while uncertainty about the COVID-19 induced economic disruption has spun markets and work-life balance into chaos, real estate tech venture capital has performed and surpassed market expectations.
Total venture capital investments surpassed $3.8 billion in funding across 73 deals, globally. During the same period last year, April and May 2019, venture capitalists invested a total of $3.0 billion across 43 deals, a gain of 27% in capital volume, and 70% in deal volume.
Compared to Q1 2020, the total capital invested, during the pandemic, increased by 52%, from $2.5 billion in Q1 to $3.8 billion in April-May. However, in terms of deal volume, the pandemic has slowed the velocity of deals by 66% from 214 deals in Q1 to 73 deals in the past 60 days, with late and later-stage funding gaining in preference.
In the past 60 days, an analysis of investments in the sector saw $1.5 billion or 49% of capital invested in real estate service companies, including Mynd, Sonder, No Broker, and Spruce. $1.0 billion or 26% was invested in business productivity platforms, including Equiem, States Title, Procore, Knock, and Briq. Additionally, $170 million, or 4.5% was invested in financial platforms in commercial and residential, including LoanSnap, One Utility Bill, and Cloudvirga.
The largest deal during COVID-19 took place on April 6th, where Airbnb, a California-based operator of a short term online property rental marketplace, raised $2 billion in private equity funding led by Sixth Street Partners and Silver Lake Management. The second-largest deal went to Procore, a Carpinteria, CA-based cloud-based project-management platform intended to manage construction and real-estate projects. Procore raised $250 million in later-stage funding announced on April 20th from D1 Capital Partners and other investors associated with the companies IPO filing.
On May 19th, Katerra, a Menlo Park, CA-based construction technology platform designed to optimize all aspects of building development, design, and construction, raised $200 million in a later-stage round from SoftBank Investment Advisers. On February 6th, Sonder, a San Francisco, CA-based home rental platform designed to help travelers book apartments, houses, condos, villas, and lofts instantly, raised $162.5 million in a later-stage round led by Fidelity Investments and WestCap Group. Finally, on April 22nd, Noah announced that it had raised $150 million in private equity led by an undisclosed investor(s). Noah is a San Francisco, CA-based provider of equity home financing designed to redefine home-ownership.
Top 5 Largest Real Estate Tech Venture Capital Investments (During the COVID-19)
- Airbnb — $2.0 Billion on April 6, 2020 — Short term rental marketplace
- Procore — $250 Million on April 30, 2020 — Construction tech platform
- Katerra — $200 Million on May 19, 2020 — Construction tech platform
- Sonder — $162.5 Million on May 4, 2020 — Home rental platform
- Noah — $150 Million on April 22, 2020 — Home equity financing
