Investors focused on real estate dish on the selloff of proptech stocks and why they’re still optimistic on the rest of the year.
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Venture capitalists who are focused on investing in companies that are revolutionizing all aspects of real estate are playing the long game when it comes to the widespread sell-off of high-growth yet oftentimes unprofitable companies leading the way.
Dave Eisenberg, co-founder and managing partner at Zigg Capital, a firm that focuses on companies at the intersection of real estate and technology, put it another way.
“If 2021 was the party,” Eisenberg said, “2022 is the hangover.”
A year ago, Zillow’s stock was trading for $131 per share. It’s plunged 66 percent since then. Redfin’s stock followed a steeper downward trend, falling 76 percent from about $62 a share a year ago to $14.52 per share at midday on Wednesday.
But there are reasons for agents, investors and brokerages to be optimistic about the mid- and long-term future, according to a panel of investors speaking at Inman Connect in New York on Wednesday.
With the likelihood that sales volume declines this year, it will push companies and brokerages to become more profitable.
“What technology is best at delivering is the reduction of manual processes, the reduction of excess time, really an efficiency driver,” Eisenberg said. “In a year where transactions are likely to be down versus where they were in 2021, we’re going to actually see technology deliver on its promise.”
“Through the use of automation driving costs down which increase profitability both of individual agents’ business and brokers and just the industry generally,” he said. “That’s going to be good for technology companies.”
What went unsaid were the many ways that same technology and ensuing efficiencies would…