Must Be the Money: The Peril of Too Much VC in 2021

You’ve likely noticed that PropTech investment has taken off in recent years.

In 2013, there was just under $100 million invested annually. By 2019, that number skyrocketed to $31.6 billion. Even during a global pandemic, $23.8 billion was invested in PropTech in 2020.

And, investment is expected to increase in 2021.

That’s a great thing for you and your company, right?

Not exactly. Increased VC investment means more money for PropTech. But, it doesn’t mean that everyone gets this investment. A few select companies rise to the top and get the majority of funding. And, everyone else is at a disadvantage.

How can you increase the chances you’ll be one of the major players? We’ll cover that in this post. But, first, let’s look at the issues associated with increased VC funding.

What Problems Does Increased VC Funding Create?

In most industries, there are three major players. These three companies are top of mind for customers and investors. While other companies can enter the industry, they’ll never be as successful as these main three.

Increased VC investment is accelerating this trend in every PropTech sector. So, you have less time to create your solution. And, rise to the top.

If you’re too slow to make it into the top three, you’ll face problems like:

Hiring the Best Team

Without the right team, even the best idea has little chance of success. If you can’t secure funding or are late to do so, it becomes more difficult to hire top talent.

So, your competitors will have the best management team, salespeople, marketing experts, and more. While you’re stuck with an average team. Or, a partial team because you can’t find anyone to hire.

Regardless of how hard you and your team work, you won’t be able to keep up with industry leaders.

Crossing the Chasm

Along with struggling to build a great team, adoption could be a challenge due to increased VC funding.

Real estate is an outdated industry. It takes a lot to convince real estate stakeholders to adopt PropTech. But, the industry leaders who capture most of the VC funding will be able to find champions and adopters more easily.

They’ll also be able to cross the chasm to widespread adoption before you. Once the industry leaders cross the chasm, it makes it more difficult for you to achieve widespread adoption.

Competitive Pricing

If you can’t snag VC investment, you’ll also struggle to have competitive pricing.

The top players in your industry will have the funding necessary to price their solution competitively. In contrast, you’ll struggle to price your solution as low as theirs.

So, your competitors will capture a larger market share because they’re priced right. By the time you can price your solution competitively, few prospects will choose you over the industry leaders.

Acquisitions

One of the best ways to grow is through acquisitions. With so much funding in PropTech, the leaders in every category can acquire companies faster.

You’ll either lack the funding to make acquisitions. Or, you’ll acquire companies more slowly than the top PropTech solutions. You might even find yourself reluctantly selling to one, well before you’ve maximized your company’s value.

Marketing Visibility

Great marketing and PR are crucial to your success. If you build a solution, the customers won’t automatically find you. No matter how great your solution is.

Instead, you need excellent PR and marketing to generate awareness of your solution. And, convince prospects to give it a try.

The PropTech companies who secure VC funding can invest in the right marketing. If you’re not one of these top companies, you’ll struggle to market effectively. So, while your competitors become household names, your company will be little known – and little used.

Increased VC funding accelerates the establishment of industry leaders. So, it’s more difficult to get to the top. And, achieve success.

How Can My Company Become an Industry Leader?

With so much investment in PropTech, it’s harder to create a successful company. But, not impossible. Here are some things you should do to reap the benefits – and avoid the downsides – of increased VC investment:

Move Faster

Moving quickly is crucial to being successful in the ultra-competitive PropTech space. The first company with a working product/service in any PropTech sector will get more investment. You might have a great idea. But, if you spend too much time trying to perfect it, you’ll get less investment than other startups.

And, once you have investment, you need to be the first to get customers. You need to find a champion to convince others to adopt your solution early on. You also need to be the first to get widespread adoption.

So, you might have the same funding as another company. But, they’re quicker to get most people to adopt their tech. Once they reach widespread adoption, your chances of being an industry leader significantly diminish. So, you need to make sure you get there first.

Build the Right Team

One way you can move faster is by having the right team in place. You have your strengths. But, you can’t run a company on your own. So, you need the right team to be strong in areas you aren’t. And, provide a different perspective to encourage creativity and innovation.

It’s also challenging to scale your company without the right team. You’re only one person. So, you need a competent team that can take tasks off your plate. And, do them well.

Plus, having a solid core team can help you get more investment. VCs often look for a core team when assessing the strength of the startup. If you don’t have the right people in place to handle finances, business strategy, marketing, and more, you could get passed over for investment.

Get a Competitive Advantage

If two companies start with the same funding at the same stage of growth, they usually won’t move at the same pace. Or, have the same level of success. So, simply getting funding isn’t a guarantee that you’ll become the industry leader.

Instead, you need a competitive advantage. A competitive advantage can help you stand out to investors. And, it can help you edge out other companies.

What can give you a competitive advantage? Executive coaching is one option. PropTech specific executive coaching can help accelerate your path to monetization. This coaching can help you discover innovative solutions to common problems like – overwhelm/time management, recruiting and retaining the best talent, scaling rapidly, managing board and investor expectations, and getting in front of potential clients.

Finding a better solution to problems your competitors likely face, too, can help you move faster and secure more funding. This makes it easier to be an industry leader – and achieve the success you want.

Wrapping It Up

Increased VC investment has helped the PropTech industry dramatically expand in the last decade. However, more investment has made it harder to be at the top of any PropTech sector. You have to move fast. Have the right team. And, get a competitive advantage.

Executive coaching is one way to get the edge you need to be successful. Learn today how PropTech Coaching Solutions can help you successfully navigate towards success in this new hypercompetitive environment.