The proptech sector has long outgrown its infancy. As recently as two or three years ago, you would get puzzled looks in the (“grown up”) real estate industry when asking for a definition of the term “proptech” whereas today the question will be answered with confidence and newly gained digital proficiency. Certain market players know perfectly well what it means to take new ideas, business models and entrepreneurs seriously and to consider them an opportunity to continue their own development.
Startups now rely increasingly on a professional infrastructure for funding their ideas as well as for advice and assistance in their continued development. Credit for this goes primarily to pioneers that started no more than ten years ago to seek alternatives to the analogue product of “property,” the people’s business of “estate agency” and the good old spreadsheet calculation in the back office.
But it is also owing to first movers of the established real estate industry who have kept insisting that the “grown-ups” should not see digitisation purely as a marketing buzzword, but as efficiency-enhancing, profitable and expansive business proposition. These forerunners are the ones who convince their companies to launch pilot projects in collaboration with startups and who were and continue to be on hand in advisory boards to assist startup entrepreneurs as business angels with smart money and expert know-how.
With many property companies now well aware that proptech can become an integral part of their own digitisation strategy, the time has come to think ahead and imagine the next step. Certain manifest trends will already give you an idea what it might look like.
The working title for the next stage in the collaboration between “young and old” could be “professional liaisons.” Another fitting sobriquet would be “strategic investment.” Especially in the current boom cycle, established companies should consider ways to actively participate in startups by committing financial and human resources. It would give startup companies a new sense of security and open up fresh opportunities. Conversely, established market players would get the equivalent of an innovation department and a software development spinoff—which imply, not least, the prospects of high returns.
Cases in point are already in evidence. And I am not aware of any real estate company that has regretted the decision to enter into such a partnership.
But it presupposes the right kind of mindset on either side of the equation, not least because certain risks do come into play. Entering into a strategic partnership could narrow the market access of startups to some of the partner’s competitors, through probably not to all of them. Moreover, the partners would be focused on a single solution and just one startup team, thereby passing up the opportunity, at least initially, to back comparable ideas with alternative hands-on approaches.
However—and this is a constant in the real estate business—opportunities and risks maintain a balance here as elsewhere. And like any business decision, it requires entrepreneurial courage and a large tolerance for error.
Yet these qualities are key instruments in any implementation of a corporate digitisation strategy. So, they are included in the panoply of many market players anyway.
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