R
eal estate is often the largest asset people own, but venture investments in the space have a poor track record. Many high-profile failures and underperformers from the recent investment boom include WeWork, iBuyer startups like Opendoor and Offerpad, and construction disruptors like Veev and Katerra.
However, as investors put their funds to work at the intersection of artificial intelligence (AI) and real estate, a more subdued dynamic is emerging. Deals are being done, but rarely with unicorn valuations. So far this year, around $200 million has been invested in startups applying AI to property management and construction, according to Crunchbase data.
The largest funding recipient was New York-based EliseAI, which raised $75 million for an automation platform serving the housing and healthcare industries. Other notable recipients include Zeitview, a drone inspection service provider that landed $60 million, and Dcbel, a smart energy system developer that secured $55 million.
While total funding is lower than in previous years, venture investors still see value in real estate, particularly in areas like construction, sales, and building management. "It frustrates us to see dollars improperly allocated to our sector," said Gavin Myers of Prudence Ventures, an early-stage firm focused on real estate and construction. He's enthusiastic about emerging areas that add efficiencies, such as AI-powered leasing agents and software for sharing information between offices and field teams.
Founders are using AI to get to market faster and more cheaply than previous generations of startups. While large startup exits have picked up recently, real estate-related companies haven't been among the participants. However, ServiceTitan, a home service contractor platform with ties to the space, went public last year and is now valued at around $8.5 billion.
With construction spending on the rise, rents near all-time highs, and home maintenance costs higher than ever, opportunities in real estate have never been bigger.
