NOVEMBER 2019CIOAPPLICATIONS.COM9and share the space with other workers. It's not a completely new idea. Office building owners have often created what were called executive suites, which were essentially the same idea. Wework has taken that general concept and scaled it beyond a few isolated offices in a single office building to a network of office spaces across the world. They've challenged the idea of companies requiring a dedicated office space to function. It's really a fundamental idea of the start-up culture that's driving many of these new Proptech companies. Compass is a "tech-forward" brokerage. They've poured cash into their own custom tech stack, but they've used a considerable amount of their funding to acquire other brokerages. They've proclaimed a very ambitious 20/20/20 goal to own 20% of the top 20% real estate markets in the US by 2020. They're well on their way to their goal, but they've been plagued recent criticism for their lack of profit strategies and litigation stemming from their business practices. However, that hasn't seemed to dull the shine for investors as the company just raised another $370 million in funding. Opendoor is the youngest of the current Proptech unicorns valued at a paultry $2 billion. Opendoor represents the largest player in what's become known as the iBuyer craze. The iBuyer concept, to reduce it to it's most basic concept, is essentially house flipping. A homeowner contacts Opendoor to receive a cash offer on their home. Once Opendoorhas purchased the property they make some repairs or renovations and then put the home back on the open market. Their hope is the traditional home sale process is so convoluted and daunting that homeowners will be willing to accept a reduced price for their home in order to avoid the hassle of a sale. There is definitely a segment of the population this will appeal to, but this model hasn't been tested in a down market when margins are tighter. I would be remiss if I were to lead you to believe that all of the money flooding into Proptech was devoted to these "disruptor" start-ups. The new kids are sexy, but there is plenty of VC cash being thrown at companies who's goal is to serve traditional real estate sale and management companies. Y-combinator, Thrive Capital, MetaProp NYC, and Softbank have all sunk countless millions into Proptech over the last seven years. Moderne Ventures, a VC fund devoted to Proptech, has an entire portfolio of companies whose function is providing services to real estate companies. Their roster is varied combining companies that streamline the commission process, reduce the friction of getting security deposits from renters, and AI platforms to help agents close more transactions. JP Morgan analysts were recently quoted likening the real estate industry to the wild west. Considering the shift in the industry, and the perceived opportunity it provides, investors have come to the party guns blazing. Proptech as a sector continues to expand and mature and doesn't show many signs of slowing down. Proptech as a sector continues to expand and mature and doesn't show many signs of slowing down
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