James Dearsley represents Unissu that opens up new opportunities for the 6,000 Proptech businesses that we track while offering property and investment communities an accurate single source for their research, procurement, and investment decisions. The company has created a suite of tools and resources to help property professionals understand the future of their industries.
We can observe the boom of the PropTech industry. Where does it come from?
James Dearsley: Industry need and demand; pure and simple. At the end of the day, real estate is about assets, and assets are about money. Technology creates opportunities to make money from assets; hence, there is evident demand.
As far as needs go, real estate has long been known for its inefficiencies and expenses and for a public perception that the hand is always stacked heavily in favor of professionals, not customers. In the digital age, consumers demand more - technology is feeding both this intensifying of demand and the industry’s ability to fulfill it.
Let us not forget that, for a long time, there has been significant resistance to PropTech. Over time, however, the results have become undeniable, and now, the industry is leaning heavily toward digital transformation and is aware that if it does not, then it will grow irrelevant.
A significant increase in investment and revenues from PropTech can be seen not only in the US but also in Europe. The UK looks particularly good in comparison with other countries. From your perspective, why is that so?
Honestly, the industry itself cannot take credit for much of its rapid success. Considering many historical factors, UK PropTech has started in an advantageous position.
Much like the US, it has significant influence and brand awareness, for lack of a better term, around the world. The English language, too, is crucial for business communication; thus, the UK has long been an important European hub for big businesses.
To our credit, however, the UK’s PropTech community has started very early in the industry’s conception, which has helped drive awareness. You will notice that those countries or regions that lack a strong PropTech community do not have very active PropTech industries.
What are the most important success factors for PropTech companies?
As with many industries, business success is largely a mix of luck, timing, and magic. However, there are certainly commonalities found in successful PropTech companies.
By far, the most important of these is providing a simple and user-friendly solution for known industries or customer pain points. Companies that do not offer this, the number of which always stuns me, will undoubtedly fail.
If you have got that covered, then an intelligent leader who can represent the face, brain, and philosophy of the company is also important.
Furthermore, the ability to create investor confidence in your company also makes things much easy as long as you can eventually back it up. We have recently seen what happens if you fail at this latter part!
Are investors willing to invest in PropTech? How difficult it is to find financing for the development of such a business?
I hesitate to say ‘easy’ because fundraising is never easy, but investor confidence in PropTech is very high, and money is being invested with a certain casualness. Some are even suggesting, following WeWork’s recent debacle, that PropTech is now in a bubble where investors are far higher amounts that the receiving companies can possibly justify when measured by traditional metrics.
Whether or not you agree with that, it is impossible to deny that investment is going up and up, year after year.
Certainly, there will come a time when investment plateaus, but PropTech has barely scratched the surface of real estate to date; thus, considerable growth should continue around the world.
I would expect assumptions about what PropTech does to come down to earth a little. There is still this common idea that PropTech is all about revolutionizing old practices with cutting-edge technologies, such as AI and 3D-printing.
In truth, this is not what real estate needs right now, and I expect the next five years to bring much more practical innovation that serves to eliminate small yet substantial real estate pain points, such as record-keeping and communication. I know that it sounds boring, but the potential that humble innovation can bring to asset owners is extraordinary.
How important is the role of software development in the case of building a PropTech company?
It varies greatly depending on what your offering is. If you provide a hardware solution, such as a camera, then there may be less cause to develop cutting-edge software than if you have, for example, a platform offering.
I return to my point of solving a real consumer pain point. If developing software is the best, the most user-friendly way of solving that issue, then yes, developing it is indispensable. If not, then building your own software becomes less necessary. Also worth remembering is that building your own software might be as valuable as partnering with another company that has already developed its own. We are seeing an increased number of partnerships that see products or services be integrated onto the same platform.
MVP is a very popular strategy in building products for many industries. In your opinion, could it be a proper approach for developing PropTech companies as well?
The best and most successful investors understand that early-stage businesses are often working with early-stage ideas and innovations. As time passes, it often becomes clear that these original ideas or innovations are not what the market needs and are not going to carry the company to success.
For this reason, investors hope to identify those founders who they believe have the ability to learn, evolve, and grow, knowing full well that the business model will then evolve alongside them. Therefore, MVP could be a good strategy.
Anyway, I wrote about this case in my article. If you want to explore more, then take a look at this.
Could you specify three of the most promising PropTech companies that are worth observing?
Just three … impossible!