VC Investing in PropTech: What You Need to Know – Abi Adisa explains

If you are plugged into the VC or real estate investing world, you have probably heard about all of the buzz surrounding the vast number of investments in PropTech.  PropTech is a new and upcoming industry that focuses on the application of technology in the real estate industry.

We spoke to Abiodun Adisa, also known as Abi Adisa, CEO of Oridun Capital Management, in order to get more information about this topic, and this is what he had to say; The use of technology in real estate has been around for quite some time now. However, it was only recently that this sector started to gain serious traction with investors. In the past few years, PropTech investments have increased exponentially, particularly with the upheaval from Covid. Changing the way, we work and live.

What is PropTech?

The term “PropTech” is short for property technology. It is a new and upcoming industry that focuses on the application of technology in the real estate industry.

Some people may think that PropTech is only limited to startups or new companies. However, this could not be further from the truth. PropTech can be applied to any company that uses technology to improve or solve problems in the real estate industry.

This could be anything from a new software that helps landlords manage their properties more efficiently to a drone that is used to help survey land for development.

We are in the early days when it comes to the adoption and growth of PropTech.

What is the PropTechOpportunity?

The real estate industry is notoriously inefficient and ripe for disruption. PropTechby applying new and innovative technologies to old problems is reshaping the future of real estate.

Real estate is one of the oldest and largest asset classes globally but one that has seen limited technology adoption. Covid has changed all that. In the process creating new opportunities.

Investments targeted at this space have grown rapidly in recent years as more investors are taking notice of the vast potential of PropTech and its many applications. Remoteworking, shared offices, flexible/community living, crypto, crowd funding, property listings/sales, mortgages, limited housing affordability/supply are some of the drivers of the space. Yet PropTech funding still pales in comparison to investments in FinTech.

Venture funding of PropTech?

Venture capital investing in PropTechis when an institutional investor provides funding to a PropTech company in exchange for equity in that company. These are illiquid and risky long-term investments. Sometimes lasting up to 10 years. In that period the venture firm acts as a partner, recruiter, promoter, adviser to its PropTech portfolio company.

This is a high-risk investment as there is no guarantee that the company will be successful.As has historically been the case, majority of startups fail. PropTech startups are no different. In the few cases where companies are successful and there is an exit for a venture capital investor, the investors returns can be significant. Successful exits (as liquidations and distressed sales do happen) typically happen via an IPO or acquisition of the portfolio company. As more successful exits happen, more venture investors will be able to raise additional capital from their limited partners to deploy to this space.

Abiodun (Abi) Adisa

President and Managing Partner

Abiodun “Abi” Adisa is the President and a Managing Partner of Oridun Capital Management, an alternative asset manager, investing primarily in a few early-stage, fast-growing companies, with a focus on West African markets. Oridun is the investment adviser to the New York-based Oridun Real Estate Fund. Complimentary to his activities at Oridun, Abi is managing director of Amara Suites, an Oridun portfolio company that provides premium serviced apartments in Nigeria. Abi is based in Lagos with an interesting New York commute. Abi’s career spans both the US and West Africa. Prior to founding Oridun, Abi was a principal and founder of Cignal Ventures, a US middle market private equity firm. Abi has worked in venture capital and technology roles at Spinnaker Ventures, Sprint, Comcast, Excite@Home, and Allied Technologies Group.

Abi holds a BSc in Electrical Engineering from Obafemi Awolowo University, an MBA from the Wharton Business School, and is an alumnus of the Africa Venture Capital Fellows program, an initiative of the World Economic Forum’s Global Leaders of Tomorrow program.