I felt the need to write this article off of the back of the news today that the first true acquisition of a PropTech company has taken place. Whilst it demonstrates an underlying confidence in the sector (at least that portion of the sector), it also tells us about the appetite of certain geographical boundaries of the sector.
I stated recently at the PropTech 2016 conference that there are three options when it comes to building your Start Up.
- Building it to be sold or acquired by a bigger firm
- Building it to receive investment from bigger firms to run alongside existing model
- Go it on your own
We have seen plenty of options 2 and 3 here but no one has really yet pulled option one.
It has been said to be the “coming of age” and a maturation of the sector but already I am looking to what others can learn from this as I suspect, many will want to do just that. What can we learn from this deal between Matterport, the larger of the two firms, and Virtual Walkthrough, its UK competitor?
I have talked a lot about the deployment of technology previously and firstly, this deal demonstrates that there is an underlying confidence in the profitability of the sector (of this section at least). Technologists already understand the technology but the industry is also picking up quickly, so now it is the time to invest and expand. A core aspect of technology deployment.
The key area of this buy out for me though is the geographical move from West to East. Matterport are a US based PropTech firm. They have been trading for a while in a far more forward thinking PropTech market. VC funding reached in excess of $1.5billion dollars last year. The UK PropTech investment market is not even close to this. We are miles behind in funding as well as knowledge of what is changing around us.
However, PropTech in the UK holds a key geographical edge being on the edge of Europe and, arguably a stepping stone to the Middle East.
We have an incredibly active property sector which is ripe for the right technology to have an impact (I couldn’t bring myself to use the term ‘disruption’….).
Ultimately, as can be seen by what Virtual Walkthrough have done, if you keep a lean business model, create a solid network of paying customers in your geographical area, keep your offering simple (I cannot emphasis this point enough) and show you have scalability – both in price point as well as industry size – then you are obviously going to be attractive.
US firms, some of whom will have received significant funding, will be looking to grow their international strength. Acquisition of a similar business model – like what we have seen here – will be an obvious winner for both sides.
Therefore, if I were you, look at what the Americans have done, align your businesses, show scale and a solid business model and start putting the feelers out. Option 1 has just been proven to be perfectly achievable.
I should think with the recent devaluation of the pound this won’t be the first significant investment and/or acquisition….interesting times.
What are your thoughts on this? Let me know.