Tech’s gold rush has disrupted a number of industries -- and real estate is no exception. The niche now has its own specialized platforms, accelerators and unique applications featuring drones and augmented reality.
But as we learned, mastering real estate tech is like mastering any niche. That was our takeaway after attending “VC Insider: Emerging Innovation in Real Estate Tech,” a talk held this month at Alley, a co-working space in New York. Here are three of the most important lessons we took from these veteran investors.
1. Become an insider.
The real estate community, like any community, is tightly knit and speaks its own language, says Brian Wilson, a member of the Investment Team at Tusk Ventures. If you’re new to a space, surround yourself with advisors who are willing to share their insights -- and listen to what they have to teach you.
“In the real estate sector, you need to pay your dues,” says Zach Aarons, project manager at real estate developer Millennium Partners and co-founder of MetaProp NYC. “You need to learn what NOI is before you go pitch a landlord.”
2. Get partners who can help you grow.
Don’t have a tech background? Don’t worry. “Sometimes you have hybrid unicorn people,” says Aarons, an investor who has funded more than 65 startups. However, he adds, “those founders who have significant technical expertise and significant real estate expertise, I can count on one hand.”
While having a technical co-founder early on is crucial, find one that won’t break the bank, advises Claire Fauquier, a senior associate at Corigin Ventures. “Tech talent is very expensive, so if you can get a technical co-founder who is not making $160K out the door, before you’re even raising your friends and family round, and they’re okay working for equity and a really reduced salary, that makes a big difference,” she says. “You can last much longer in case you run into any funding issues.”
3. Seek opportunity -- not bandwagons.
Like so many industries, real estate is antiquated, with much room for growth and innovation. For instance, while entrepreneurs have flocked to areas such as property management, data analytics and brokerage, Aarons says they’ve shied away from others such as surveying and title insurance. Many believe these markets are too niche when really they’re massive, Aarons says.
Do your research to find out how you can stand apart in a sea of founders trying to disrupt the same small number of companies. For instance, Fauquier often hears lectures from wannabe rivals to StreetEasy, a popular platform for buyers and renters in New York. “I question whether or not consumers of real estate tech can really digest 30 to 40 different solutions on a regular basis,” Wilson says.
Companies that aren’t distinct might not survive, Wilson says. “I think you’re going to see a lot of integration or companies just fizzling out.”
Full disclosure: Entrepreneur Media, Inc. is an investor in Alley.