Welcome to the fourth and final article in our series exploring Said Business School’s first property research report, Proptech 3.0: the future of real estate.
As we’ve previously mentioned, Eurolink closely monitors market innovation, so it can reflect new market trends in its software, Veco™, while keeping you up to speed with how these trends might impact your business.
In line with this, in this article we examine Proptech funding and sources of finance for your own start-up proposition.
Andrew Baum, author of the Proptech report and visiting professor of management practice at the University of Oxford’s business school, cites research from CB Insights, a technology intelligence platform, which suggests that Proptech companies have raised almost $6.4 billion (£4.7 billion) in funding across 817 deals since 2012, highlighting investor confidence in the market.
Using a variety of data sources, professor Baum suggests that there are likely to be over 2,000 Proptech start-ups ‘of serious ambition’, of which 60% have raised funding.
According to CB Insights, the top five most active Proptech investors include:
- 500 Startups
- Thrive Capital
- Frontier Digital Ventures
- SV Angel
Here are five possible sources of funding for your new business venture:
Friends and family
This option is a double-edged sword. While it may seems like the most obvious and perhaps easiest option, it brings with it the pressure of delivering a return on investment to loved ones for whom a loss of funds could be devastating. Obviously, there’s pressure to deliver a return for all investors, and it’s the responsibility of these investors, whoever they are, to undertake their own due diligence and risk assessment of the plan in question, but borrowing from friends and family is a different sort of pressure all the same, so it’s worth keeping this in mind.
If you’re fortunate enough to be eligible for a business loan, research the open market and all associated costs, not just the headline interest rate, which is likely to fluctuate over time. For example, consider any exit penalties for repaying a loan early.
Angel investors typically invest in a start-up business in return for shares in the business. Investors may be individuals or a syndicate and invest anything from £10,000 to £500,000 and above. It is essential that you fully research any potential investor in your business, particularly the timeframe within which they expect to see a return on their investment, to minimise any potential for crossed wires at any stage of your development. Visit the Business Angels Association and investment networks such as the Angel Investment Network for more information. And don’t rule out your software provider, which may want to explore the possibility of a joint venture in your chosen field of development.
Crowdfunding involves raising small amounts of finance from multiple people. Its popularity can be attributed to the lack of finance available from traditional sources such as high street banks and its relatively low fees. Visit the UK Crowdfunding Association for further information.
You may not have thought previously about a merger or acquisition, but joining forces with a like-minded business owner could provide access to the start-up funding you need to get your idea off the ground. Selling your business to a competitor may seem a little drastic, but consider all options: perhaps an exit strategy that provides you with the start-up cash you need and a new lease of life for which you’ve been yearning could be just the ticket if handled appropriately.
For further information on what’s involved in merging a software system, contact email@example.com