3 proptech VCs list the biggest opportunities and challenges in pairing real estate with technology

MetaProp, a New York-based proptech VC founded in 2015, focuses on early-stage investments. They are working on a third fund, aiming to raise $100 million, according to The Real Deal, and have raised $45 million in previous rounds. MetaProp has invested in more than 100 early-stage proptech startups, including rental-tech firm Jetty.

Business Insider spoke with Zach Aarons, co-founder and partner at MetaProp, about his view of proptech's future.

Opportunities: co-living, other tech for seniors

Aarons sees an expanding market for senior housing technology, as the baby boomer generation ages out of the workforce. MetaProp invested in a startup, Irene, that lets seniors sell their house so they can access equity in it, and then retain a lifetime-rent clause, so that they can stay in the home without paying property taxes.

"With the explosion of co-living, a Millennial and Gen Z phenomenon, we're seeing an explosion of similar types of business for baby boomers on the work front and living front," said Aarons. The company has yet to invest in any co-living solutions for seniors, he said. Co-living has been gaining in popularity in general and retirement savings have been falling.

Challenges: slow uptake in general, and VR is far off

Without a strong financial incentive to take risks with technology, the real estate industry has largely played it safe. While Aarons sees that changing, change is coming slower than the tech people might want. Aarons referenced the climb in property prices since the housing crisis as a disincentive towards tech development.

"People are hesitant in my industry to fail at things," Aarons said. "Incumbents still control the money, so they're forcing the startups to do things that are beneficial for them."

Aarons sees another challenge, the implementation of virtual and augmented reality, as a potential opportunity in the long run.

"I've been a VR advocate for this sector, but it hasn't taken off yet … AR/VR was one of the few things in the last cycle that panned out worse than people thought," Aarons said. "It's proliferating from a marketing perspective, but not from a design perspective."

Trinity Ventures is one of the old-guard venture funds that has dipped its toe in the proptech pond, and is joined by heavyweights like Sequoia Capital, Andreessen Horowitz, and SoftBank. Trinity got its start in proptech back in 1998, before the name was even coined, with an investment in commercial real estate market LoopNet, later acquired by CoStar.

Business Insider spoke with John Lin, an investor and principal at Trinity Ventures, about upcoming trends in proptech.

Opportunities: adding AI, analytics

Lin sees a lot to gain in automation and AI, a trend that connects proptech to the rest of the tech world. Products are being developed in different sectors of the real estate world, and are targeted at everyone from home buyers to real estate agents to large institutional landlords and property managers. One company in Trinity's portfolio, Side, develops tools to help real estate agents run their own businesses with minimal paperwork.

"Agents are constantly on-the-go and working from mobile devices, which is helping to drive demand for time-saving automation," Lin said. "One example is using AI to read and input documents with natural language processing, or NLP."

NLP is technology that allows machines to read and understand human language for specific tasks.

Lin sees analytic software like Zillow's Zestimate as another place where real estate can use tech to gain an advantage.

"Other companies have combined massive volumes of data, such as MLS listings, with government, demographics, and financial data, to predict housing prices," Lin said.

Challenges: paperwork is holding back digital transformation

Lin identified paperwork as one of the biggest roadblocks to more advanced data in real estate.

"One huge barrier to digital transformation is that there is so much manual paperwork," said Lin. "Taking that paperwork digital has proven to be more difficult than expected," Lin hopes that NLP and similar types of software can help make the digital transformation easier.