Fifth Wall’s Brendan Wallace On Why The Best Proptech Bets May Not Look Like Proptech
Fifth Wall’s CEO Brendan Wallace discusses how AI is changing proptech investments and the definition of the sector.
Intelligence analysis by Qwen 2.5 (3B)
Fifth Wall’s CEO Brendan Wallace discusses how AI is changing proptech investments and the definition of the sector.
Brendan Wallace, who runs a company that invests in real estate technology, says that because of AI, some companies that use technology to own and operate real estate might not be considered proptech anymore. This means that the money being spent on these companies might not be counted as proptech funding.
Analysis
Horizontal Software Solutions
Higgsfield, a visualization software company, is being used by real estate agents and commercial leasing brokers to represent spaces. This solution is surpassing industry-specific solutions for space visualization, which were previously narrowly defined as proptech. This shift towards horizontal software solutions is a significant change in the proptech landscape.
Full-Stack Businesses
Fifth Wall has invested $135 million into Atoms, a full-stack business that reimagines physical space based on autonomy, AI, or robotics. These businesses are building a physical thing, and they are building a real estate company, directly or indirectly. This investment is not captured under the traditional proptech definition, but it represents a significant shift in the sector.
AI and Proptech
AI is driving the shift towards software that serves multiple industries. Without something profoundly better that you can’t replicate on your own, there’s less justification for buying outside software. The imperative to buy these third-party solutions has been reduced, and more value has been placed on the best horizontal solutions, whether that’s a foundation model or a specific use case like sound, audio or visual.
AI Development Labs
Bespoke AI development labs are now building solutions for the real estate industry. For example, Antares, a lab backed by Fifth, works with a number of strategic partners. This trend is reshaping the proptech sector and changing the definition of what makes a venture-scale proptech software company.
Key points
- Fifth Wall has invested in companies that use technology to own and operate real estate
- AI is driving the shift towards horizontal software solutions and full-stack businesses
- The definition of proptech is changing as a result of AI
- Bespoke AI development labs are now building solutions for the real estate industry
- The imperative to buy outside software has been reduced, and more value has been placed on horizontal solutions
As AI continues to improve, more companies will be able to replicate the solutions that were previously only available through outside software, reducing the need for venture capital investments in these companies.
However, this shift could also lead to a decrease in venture capital investments in proptech startups, as the value of these companies may be harder to quantify.
