Friday Letter: How the emerging proptech sector will survive a downturn

VCs are a confident lot. It’s something I’ve witnessed many times over the years. I saw their confidence after the dotcom bubble and again after the 2008 recession.

Clearly, the covid-19 pandemic and resulting economic downturn is not like the previous bumps in the road. The calamity the coronavirus has wrought across the world has no precedent. But VCs remain confident. A common refrain I’ve heard from investors since mid-March is that they’re open for business. Investors are closing deals, sourcing opportunities and fundraising.

Open for business doesn’t mean it’s all roses. Anecdotally, we’ve heard of investments put on hold and term sheets rescinded or redrawn at lower valuations. Some portfolio companies are in need of a lot of triage as most are cutting back.

This has been a long year so far, and we’re not yet at the halfway point on the calendar. In light of recent events, we often wrestle with how to present our coverage going forward. It’s hard not to produce anything other than covid-19 crisis stories. But the pandemic, as sad and as far-reaching as it is, is only part of the story coverage.

As such, we plan to continue to provide insights on which VC firms are fundraising and which LPs are looking to invest. In addition to our ongoing sector trend stories, profiles, insights and analysis, we plan to provide useful information on how the VC community is reacting to covid-19 and the resulting economic downturn in this new era.

Here’s why we focused on proptech

That brings me to our latest cover story in our May/June issue. We’ve taken a deep dive into proptech, which was a growing sector prior to the covid-19 pandemic.

The story was in the works for months, as we saw the sector grow 160x over the last decade. But we went back for additional interviews with sources to make the analysis more cognizant of the times.

Read why investors feel that the issues that proptech aims to solve won’t go away in a recession. Instead, energy efficiency, cutting costs, building management are all top concerns for proptech start-ups and their investors.

Just this week, I’ve seen at least two proptech deals get announced. One for SensorFlow in Singapore, and the other for McLean, Maryland-based Datakwip, which was backed by the corporate VC GreenGen Ventures. (You can read more about how corporates are focusing on proptech start-ups.)

The latest issue of VCJ also features opportunities in pet health and why new managers are facing tough times in the months ahead. You can download the PDF by clicking here.

In the meantime, I hope you are staying safe and we look forward to bringing you more insightful coverage, because VC remains open for business.

Inside tip

If you have news or views you’d like to share with me, I’d love to hear from you. You can reach me at agoldfisher@buyoutsinsider.com and I’m open to voice and video calls.