Stellifi VC's Monthly Newsletter
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What's in store?
The latest news on PropTech funding, and new developments from the Fed, DOJ, and DOE that will affect CRE and PropTech. But first…
Venture Partner Announcement 🚀
We’re thrilled to welcome Noah Bachow as our newest Venture Partner. Noah brings a wealth of experience from the commercial real estate industry, having invested and developed various asset classes as Managing Partner of Bachow Ventures LLC. Catch up with him (noah@stellifivc.com) to discuss our portfolio companies, investment trends, new seed opportunities and much more. Welcome aboard, Noah!
Fresh Off the (Stellifi) Press 📰
- #1 Reason Start-Ups Fail: Start-ups often rush to scale up their business, but a repeatable, founder-led sales strategy is the key to a strong foundation.
- Cracking PropTech Sales: For software companies, real estate and construction are notoriously difficult to sell into. The key is to focus on building trust.
Industry News 🏢
- Rate Cuts: The big news this month is, of course, the 50 bps drop in the Fed funds rate. What does that mean for PropTech? Well, buying behavior (of software and services) in real estate and construction is very much affected by interest rates. This drop (1) lowers the risk-free rate of return, encouraging investors to take equity bets and (2) reduces debt service burden for some borrowers, easing pressure on operating margins. Depending on a given company’s value prop, the impact could differ. But broadly speaking, an increase in CRE investment activity is sure to be a positive for revenue growth in PropTech.
- Venture Funding Down: After a bumpy first half of 2024, global venture capital funding reached the year’s lowest point in August, falling to $18 billion. Despite this drop, there’s no need to despair. The recent rate cut has boosted confidence in the private markets, though the effects aren’t immediate.
- PropTech Funding Up: Despite the drop in overall venture funding, there have been some very significant deals in PropTech, including a $150M round for Bilt Rewards, and $30M for Elise AI, minting the newest unicorn in PropTech (image below).
- DOJ v RealPage: Last month the DOJ filed a civil lawsuit against RealPage over their rent pricing algorithm. While RealPage’s tool is popular, there are many such algorithm-based rent pricing tools out there. This case will surely impact the strategies of these companies and the pricing tactics of rental property owners and managers. Hotels are also under scrutiny — could they be next?
- Is Office Back? Maybe not yet…but as more employers mandate a return to office, and WFH starts to fade, there are some green shoots emerging for the asset class. For one, absorption turned positive in most markets for the first time in 2+ years.
- New DOE Funding: A week after the DOE announced a plan to improve building energy efficiency, they unveiled $3 Billion of funding for EV charging and the battery supply chain. While IRA funding for similar initiatives hasn’t been terribly effective, we remain hopeful. As we noted in an article this summer, there are a number of budding companies at the intersection of Real Estate x Energy x Tech that stand to benefit from these programs both directly and indirectly.
Dispatches from Blueprint
The Stellifi team visited Las Vegas last week for our favorite PropTech conference - Blueprint. A couple things stood out for us this year:
- Role of Gov’t: With the spotlight on affordability and energy efficiency, startups and real estate owners/developers alike are increasingly trying to figure out how to work with the leaders in government to remove red tape and achieve these goals.
- Making Sense of the AI Boom: Most people think of chatbots when they think of AI x Real Estate. But now cutting edge operators are wondering whats possible beyond a transactional conversation. More startups are finding ways to use AI to make sense of the large and often disparate datasets that their customers have at the disposal.
- More Construction: Perhaps just anecdotal, BUT it seemed there were more early-stage companies focused on construction problems than in the past. Connecting the dots, the solutions that stick out built on innovation in AI and robotics that was not as accessible just a couple years ago.
Portfolio Highlights 🔦
- Portfolio Spotlight: Roomie: In our latest installment of the Portfolio Spotlight series, learn about how Roomie is changing the move-in experience with their industry-disrupting 3-D mapping tool.
- Leni adds another top PMS to its integration list, announcing its partnership with RealPage.
- Dextall showcases retrofit use case in NYC.
- Tough Leaf is featured in Crain’s New York Business real estate section.
