After years of decline, proptech — the technology driving efficiency in real estate and property management — is showing signs of revival. Once hit hard by high interest rates, a retreat in venture funding, and the AI investment boom, property technology is emerging from what some called an “extinction event.”
“I’d say we just lived through probably the most challenging three years that certainly I’ve ever experienced,” said Brendan Wallace, co-founder and CEO of Fifth Wall, the largest venture capital firm focused on technology for the built environment with over $3 billion in assets under management. “You saw a lot of companies and new businesses and venture funds die. We just lived through an extinction event.”
Wallace said the downturn in proptech is finally ending, pointing to ServiceTitan’s successful IPO as a turning point. The cloud-based field service management company, which caters to trades like plumbing and HVAC, raised about $625 million and saw its shares surge 42% in its Nasdaq debut. He also highlighted emerging unicorns such as Juniper Square and Bilt. Bilt, a platform that offers loyalty rewards for rent payments, raised $250 million in July at a $10.75 billion valuation, signaling investor confidence is returning.
“The amount of enterprise value destruction that happened to proptech was unprecedented from 2022 to 2024, but the amount of value creation in the last 15 months has also been unprecedented,” Wallace said.
However, the same can’t be said for climate-focused property technology. Wallace noted that this sector is faltering under shifting U.S. political priorities, as sustainability and decarbonization lose urgency in national discussions. “Many climate funds are struggling to raise. Many real estate owners are deprioritizing sustainability, decarbonization, and ESG,” Wallace explained. “There is a palpable, negative sentiment shift that has set in on climate-related proptech.”
Despite the headwinds, Wallace remains optimistic. He believes local governments will drive future climate investment, as many cities seek new revenue streams through carbon taxes. New York City, for instance, continues to pursue aggressive environmental initiatives even as national support wavers.
Fifth Wall is betting long-term on the sector, viewing the current downturn as a buying opportunity. “My view is the real estate industry is still responsible for 40% of carbon emissions,” Wallace said. “It’s going to cost a lot to decarbonize, and capital will flow into that space — which is one reason we’re still deploying capital, because we’re the only ones.”
