The Proptech Investors’ Dilemma – What are the Key Success Factors that Secure Survival?

The real estate industry is being known as a late adopter when it comes to change and innovation and whilst it is slowly evolving, parts of the business are increasingly being conquered by property related startups, i.e “PropTechs“. These young and agile companies offer new solutions and use new technologies to increase efficiencies, cut costs and solve omnipresent, industry-wide problems. The focus of this research is the analysis of the key factors that influence the survival of PropTechs. Whilst many research papers are focusing on data based on surveys, which often leads to a high information density but small samples, this research makes use of a large quantitative data base from one of the most important platforms for private and capital markets globally, incl. Private Equity and Venture Capital. Our results confirm that the success of PropTech is non-linear and is explainable based on size, the number of employees and most importantly the number of investors. Furthermore, a simulation approach identifies the optimal parameters that maximize the survival probability. Our results are important to diversify capital across young and agile real estate related companies.