New Developments in European PropTech: A Q&A with Mark-Phillip Harré, Investment Manager at SIGNA Innovations
Meet Mark Harré — a Berlin-based Investment Manager at SIGNA Innovations. After three years at DVH Ventures, Mark joined SIGNA in January 2019 and is now focused on early stage PropTech investments. With a combination of varied experience, dedication and sheer love for his job, Mark has become not only a professional at leading investments, but also a valuable advisor for startups.
For these reasons, we’re especially curious about his perspective on PropTech startups in Europe. We had the chance to pick his brain about current trends, what makes the sector so unique, what opportunities exist for founders in the space and more.
Hi, Mark. What have been some of the more exciting developments that you’ve noticed in the PropTech and smart buildings sector over the last few years?
The development in the PropTech space now shows many parallels to the developments in the FinTech space a couple of years ago. The first PropTech models that appeared on the market followed a clear B2C approach and focused on the residential market. Some of the first models can be described as FinTech crossovers, such as Exporo, and have successfully established themselves in the market. At present, however, the trend is increasingly moving towards B2B models. Individual areas of the value chain are being disrupted by technology. Similarly, we were also able to observe this unbundling effect during the second wave of startups in the FinTech sector. Consequently, there are many parallels here.
What opportunities for founders and startups exist in the smart buildings space, specifically?
Smart buildings are much more than just features of an apartment or office that can be operated via an app. The collection and evaluation of real-time data and the knowledge gained from this can enable landlords to design their spaces more efficiently (e.g. closer to the user). Solutions that enable data-based optimization of buildings are increasingly in demand. These optimizations can have several dimensions, whether in terms of energy efficiency or alternative use of the space (such as frequent change in usage or integration into a public digital infrastructure). The use cases are endless.
In terms of European investments in the PropTech space as a whole, what kinds of trends are you seeing?
First of all, all major VCs have now identified PropTech as a relevant vertical and plan to allocate some of their funds to PropTech. On the other hand, we are seeing more and more serial founders recognize the enormous potential in the real estate industry. They bring a lot of experience with them. The market is growing on both sides, and it will be exciting to see which solutions and technologies prevail in the medium and long term.
In addition, the real estate industry as a whole and legislators are increasingly demanding intelligent solutions such as BIM in the planning process. These solutions require the participation of all stakeholders along the value chain, and it will be exciting to observe whether a startup solution can actually prevail here.
What are your thoughts on hardware startups in PropTech?
A major difference between PropTech and other technology trends is that it is based on a real physical asset. Hardware, such as sensors or smart meters, act as enablers of the asset. The problem is that pure hardware cases often do not scale sufficiently from a VC perspective to be considered an attractive investment. Solutions that are hardware agnostic — and thus solve the problem of lacking scalability — are quite interesting. A good example for this are smart metering solutions which are based on various hardware solutions and whose actual USP lies in the evaluation and processing of the data generated by the hardware.
What about challenges for the PropTech sector to overcome?
The megatrends have already been recognized by the industry. A fundamental understanding of the cycles of innovative and disruptive technologies is often lacking among decision-makers, and can thus represent a real obstacle — especially for new technology providers who sometimes have to break resistance in order to establish their often more efficient solutions. But the trend is clearly in the right direction.
What do you like most about investing in this sector? What makes it special or unique?
That’s easy. The founding teams. It is inspiring to work with founders and to be allowed to accompany them on their exciting journeys: the development of their companies. This is not where PropTech differs greatly from other technology sectors. A huge difference, however, is the asset, the property itself. It is fascinating to observe how founders with their innovative ideas ensure that a product that we all use on a daily basis and take for granted — such as a property — gets closer to its users through digital products.
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