Hugo Cheuk is the COO and Co-Founder of viAct. He is a building engineer with a Master’s Degree in Business Administration. He has 10+ years of experience in marketing strategy and brand development as a serial entrepreneur and community builder. Before starting his AI journey at viAct, he had been the head of business development at Shiseido, HK where he was in charge of channel strategies and corporate partnership. Earlier Hugo have also owned a profitable engineering company. Hugo currently has extraordinary contribution in positioning viAct as one of the most renowned AI companies in Asia & beyond.
The pandemic had created a favorable atmosphere for the PropTech investments. The real estate market witnessed a historic drop in interest rates for mortgages which led home buyers go Gala over such once-in-a-lifetime opportunity. Taking advantage of the situation, the demand for building new homes and infrastructures suddenly witnessed a surge. When till date real estate development was playground for selected builders, brokers and agents; the pandemic gave a push to those startups that augmented real estate with technologies empowering remote operations, faster development and safer construction jobsites. This was meant to ensure the growing demand for productivity in the sector with simultaneous enhancement in safety standards in the sector both during construction and post construction phase of an infrastructure.
The pandemic led to the compulsory incorporation of technology to the real estate world which was till then a luxury rather than necessity. Artificial Intelligence, Machine Learning, Internet of Things were the key elements that digitalized the real estate sector. Startups providing digitalization solutions for the real estate industry therefore caught attention in the investment world. Adoption of such technologies made it easy for the giants in construction, real estate and property management to streamline data management and simplifying massive day-to-day operations through remote surveillance, systematized workflow and coordinated maintenance.
The Contemporary Status of PropTech Investments
This digital disruption which did set crossroad between traditional real estate and technology however has been hurt in the recent times. However, the PropTech investments were hurt in 2022 due to the broader market reset. The PropTech entrepreneurs and investors are now critically analyzing the industry for further technology intrusion in a more beneficial way. One of the major reasons behind this include rise in housing prices, interest rates and inflation with slowing down of demands dramatically. The then high flying PropTech startups are now reported with not enough transactions to make money. Thus, venture financing recorded a low value in the recent times. It is quite evident that investors are being critical to pour in money.
The roller coaster ride for the venture capital market which was witnessed in 2022 predicts a period of irrational exuberance with markets shifting to a state of scarcity and stagnation especially in the PropTech industry. This time is therefore the “survival of the fittest” era for the PropTech startups. In an interview, Dave Eisenberg, founding partner of Zigg Capital, said that “2023 will be about PropTech companies surviving, thriving or diving in the downturn,” which pretty much covers all the possibilities. He continues saying “a handful of very savvy transactions that will pierce through the liquidity desert and prove to be transformative a few years from now.”
Evidently, the PropTech startups are therefore in a bottleneck where only consolidation of individual point solutions would get more priority than platforms automating the entire value chain. Many startups are predicted to run out of money by 2023 but those state-of-the-art solutions which are extensively consumer-oriented would surely pick up steam. In the similar notion, the managing director and global head of innovation at PGIM, Sara Shank, asks the PropTech start-ups to “focus on their strengths, focus on what sets them apart from their competitors and make that clear in their pitch, focus on what data they can provide (data will be a real focus for 2023 for landlords), focus on ease of implementation (don’t forget to hire strong customer success people who communicate well with your landlords), and as always, focus on creating what real estate wants not what you think real estate needs”. viAct (a PropTech company in Asia) CEO, Gary Ng says “The current times are not favorable in terms of investment but demands for property technology would never decline. Real-estate consumers are more focused towards technology that holistically solves their issues pinpointing on various scenarios taking into consideration both accuracy and privacy; which is what we do in viAct”. Therefore, despite the unfavourability in the investment ecosystem, PropTech companies are thriving well with demands for technology in infrastructure development at its rise globally.
Investments For the Fittest: Case Study of Recent PropTech Investments
Despite the turbulence in the capital market, startups with exceptional product market fit are still gaining attention from the VCs. Such is seen with the phenomenal investment of $200.4M in funding over 9 rounds in OpenSpace with their latest funding raised in 2022, from a Series D round. The US based company which develops AI-driven photo documentation tool that automatically creates navigable photo representations of job sites gained its popularity during the pandemic when the labor crunch hit the real estate industry. The macroeconomic headwinds which are constantly causing a decline in investments in this area since 2022 has made it necessary for PropTech companies to create a market differentiation in order to gain a position. Till date in 2023, Camber Creek, a leading real estate tech venture capital firm closed its Opportunity Fund I at more than $100 million which basically was followed by firm’s $325 million Fund IV close in 2022. Such opportunity investment in PropTech is a boom at this moment because in every fund there is an initial investment and then follow-ups which basically is from reserves from VCs. However, as the PropTech companies are excelling especially, most VCs find it difficult to follow up as the reserves run out. In such cases such rounds help VCs like Camber Creek to have a pool to easily bring down such conundrum. Jeffrey Berman, partner at Camber Creek says “I would certainly say that this is as exciting a time as any. We keep on getting more excited about the space. I think the amount of money that goes in, and who is writing those checks, might shift somewhat. It will be really interesting to see at the end of 2023 how that shakes out.”
Decoding viAct’s Investment Capabilities in the Contemporary PropTech Ecosystem
On a similar note, another startup that is growing exceptionally in this sector is viAct headquartered at Hong Kong. The company has grown exceptionally with 100+ deployments in Asia, Europe & Middle East with 90% user satisfaction due to its 97% industrial grade accuracy. Gary Ng, CEO & Co-Founder of viAct states “Even though there is a downtime prevailing in the investment world currently but with an exceptional, consumer-oriented strategy, PropTech companies can still keep their boats floating.” Ng adds “A strong international expansion of viAct in last 2 years with large overseas corporates from Singapore & MENA region approaching at large (including many Fortune 500 players) indicates ever-increasing demand of technology in real estate sector.” With viAct at a verge of raising its Series A by the Q2, 2023; it has been recognized for its disruptive AI-based solution as 2022 KPMG China Leading PropTech 50 & Forbes Asia 100 To Watch 2022. The contribution of the company in bringing safety, productivity and environmental compliances for construction, real estate, smart cities and property maintenance that helps property as well as construction companies to grow sustainably has been well-recognized. viAct was earlier backed by Alibaba Hong Kong Entrepreneurs Fund, Artesian Ventures and ParticleX with 2 million USD in 2019 which was just before the pandemic began. From then till date, the PropTech company has utilized the resources to grow in terms of revenue, number of employees, and impact generated to the industry. Holistically, viAct has created a new landmark in the field of property technology with its 50+ AI powered proprietary modules which caters a wide range of problems for the entire life cycle of an infrastructure.
Conclusively, the investment scenario in PropTech at this moment seeks for a strong brand differentiation value for companies keeping technology like big data, artificial intelligence, IoT, robotics, video analytics at its core for automation in planning, designing, developing, construction, management of infrastructure operations across the commercial and residential real estate markets.