The WeWork disaster is an ominous sign for real estate ‘tech’ startups. It’s a harbinger for those that mask themselves in the guise of artificial intelligence and mediocre software.
- Tip of the iceberg: A true tech company fundamentally change existing processes with scalable technology. Simply rebranding the process of flipping houses, consolidating brokerages, or squeezing more people into office space is not what our industry needs. The small echo chamber continues to inflate the bubble –– WeWork was simply the first to go down.
- Bottom Line: Oracle’s Larry Ellison: “WeWork rents a building, and breaks it up, and then rents it. They say, ‘We’re a technology company, and we want a tech multiple.’ It’s bizarre.”
- Trend-lines: The PropTech space has thus far failed to disrupt the industry. VC’s tell us that real estate tech companies seeking to raise Series B and Series C rounds at valuations in excess of $100 million are having a difficult time in the current environment. Earlier valuations bestowed by boutique real estate VC’s have not translated, and investors are shying away in later rounds.