The Real Disruptions to the Real Estate Industry

On October 19, 2015, CBInsights posted an article that detailed the venture-backed startups responsible for disrupting the multibillion-dollar real estate industry. The full article can be read here. The following is a response from Moderne Ventures founder and Managing Partner Constance Freedman:

The companies mentioned by CBInsights are making a difference for sure, but it’s important to note a whole host of other companies disrupting the industry—not necessarily "disrupting" the industry in the way we traditionally think of it (i.e., companies trying [to no avail yet] to disrupt the agents), but rather disrupting the way the industry does business. Real estate is an industry of 100,000 brokerages, a.k.a. 100,000 small and medium sized businesses (SMBs).  When you fold in its adjacent industries like mortgage, finance, insurance and home services, that number grows to 600,000 SMBs and comprises well over 20% of the US GDP.  Tech companies that are focused on B2B services like marketing, transaction efficiency, credit scoring and financial transactions have the power to impact this industry far more than the "real estate-focused" startup.

 By example (full disclosure, I’ve invested in most of these):

  • DocuSign: creating a paperless transaction. Imagine getting rid of the reams of paper that come along with the rental or purchase of real estate. DocuSign’s kill-paper campaign changes how we do transactions (in real estate and beyond).
  • Notary Cam: fulfilling the final mile of paperless as an enotary
  • GrowthGeeks: providing agency-quality marketing professionals to SMBs that can’t afford an agency. $72B of marketing spend can get much more targeted.
  • August Home: changing home access for consumers, realtors and property managers
  • Loop & Tie: changing the lame corporate gift/closing gift experience forever
  • Better Mortgage: taking a mortgage closing from 45 days to 5 days

What else has affected real estate?


The Uberfication of everything: Knowing that a Zipcar or Divvy Bike is across the street changes whether someone needs a garage; knowing a room can be rented on AirBnB can impact how much one is willing to pay for a mortgage or rent; and knowing that with a click of a button TaskEasy can send me someone to mow my lawn or plow the snow can make a difference between deciding on a condo or single-family home, while TaskRabbit can make sure those IKEA furniture sets get put together right or get a that fresh coat of paint on the wall to make a home the buyer’s own.

Alternative financing solutions a la Patch of LandAsset AvenueRealty MogulRealConnex and others may (or may not) disrupt traditional financing, but they are causing traditional PE firms to put their assets online, changing forever the insight that investors have into their investments.

On the commercial side, companies like Field Lens are changing the way construction sites are managed, saving millions in cost and months of time in a construction project, not to mention insight that was previously unattainable by project crews and asset managers.  Drone Base makes it possible to capture images for real estate without having to have Drones and pilots across the globe. A simple marketplace makes it possible to outsource this need.

At first glance, the CB Insights list of companies changes how real estate is done.  A deeper look shows that tech companies improving and approaching the B2B and B2B2C markets at large actually have a far greater impact on the real estate industry, its players and ultimately the consumers’ overall experience.      

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