VWV Volumes #9: Incoming Co-director Olivia Tulkoff on Diversity in Proptech

Will proptech bring diversity to real estate?

Real estate is one of the oldest and most institutional industries out there. In New York City, where some of the most expensive and valuable real estate in the world exists, the biggest property owners are almost all white men.

This is what makes up the real estate world, and so it is no mystery that it has taken a long time to find its disruptors. However, the disruption of the real estate world is happening today in the form of property technology innovations, or PropTech. PropTech, often thought of as a subset of fintech, refers to any technology that interacts with real estate, or properties. This could range from utility tracking technologies, to smart keys on apartment doors, to advanced construction robotics, and everything in between. PropTech is a relatively young industry, with the first wave happening after the burst of the dot com bubble, then a second wave after the 2008 financial crisis, and now the third wave. As a young industry, one might expect that it will change how the face of real estate looks like today: pale, male, and stale. Unfortunately, however, that does not seem to be the case. Only 9% of proptech founders are women. This is a larger problem for female entrepreneurs generally as it likely stems from the lack of VC dollars available to women. According to one recent study by the British Business Bank, female founders get 157 times less funding than male founders. The study also found that at the current rate of progress for VC investments in female founded companies, it will take until 2045 for all-female teams to corner just 10% of the available venture money. Not only are women being sidelined, but BIPOC founders are not given the attention they deserve either. Between 2013 and 2017, upwards of three quarters of all US VC dollars were given to white founders.

However, there are leaders in the PropTech space who see this issue and are working to ameliorate it. One example is MetaProp, a leading PropTech focused VC (whose co-founder, Zach Aarons sits on VWV’s advisory board). Nearly a third of their portfolio companies have chief executives who come from non-white backgrounds, a proportion not reflected in most other venture firms and certainly not in PropTech deals writ large. As MetaProp’s co-founder, Aaron Block, said, “When you lead with diversity, you have a chance. And we work really hard at this. We track it, talk about it, push it, write about it. And yet we’re still not doing a good enough job”.

With real estate maintaining its status as one of the biggest industries and accounting for the majority of all global assets, it is no wonder that PropTech is a huge market opportunity. According to Statista, between 2014 and 2020, the value of real estate tech deals globally was $8.4B and the value of fundraising by PropTech companies exceeded $18B. Multiple venture funds, besides MetaProp, have cropped up as well with a focus on PropTech opportunities. One such fund is Fifth Wall, which has raised two funds to date totaling $715M. Others such as Camber Creek, Brick & Mortar, and JLL Spark Global Venture Fund, have all raised $100M+ funds and are sinking all of the money directly into real estate technology. 

The venture dollars are available and bountiful and the industry is ripe for innovation and disruption. It is up to the investors themselves to ensure that their money goes to founders from diverse backgrounds and to ensure that the PropTech industry does not adopt the same demographics as the very industry it claims to disrupt.