Salesforce’s announcement yesterday that it had made a “strategic investment” in mortgage-tech startup Blend put a highlight on a startup sector that's on track to surpass last year’s funding.
Real estate startups, sometimes called proptech for property tech, have raised $1.9 billion from investors this year, an average of about $475 million a month, according to startup tracker Crunchbase. That's up when compared with last year’s $4.99 billion, an average of about $417 million a month. Those numbers don’t yet include the recent Blend investment -- the companies didn’t provide details including monetary value.
In January, REX, a residential real estate brokerage developing artificial intelligence tools, closed on $45 million of investments, Crunchbase said. The same month, online home selling platform Knock raised $400 million in an investment round that mixed equity and debt. In March, two iBuying companies raised funds: Opendoor secured $300 million and Offerpad, the company formerly associated with Zillow, raised a $565 million investment round.
“If these massive rounds are any indication, 2019 is likely to surpass last year’s numbers,” Crunchbase said in a report.
The year to beat is 2017 when real estate startups raised a record $5.8 billion, an average of $483 million a month, according to Crunchbase data. For all of 2016, the total was a mere $1.67 billion and in 2015, it was $930 million, Crunchbase said.
Blend, started in 2012, is a company that sells software to banks and lenders to digitize the application and underwriting process. It sells software to banks including Wells Fargo that collectively account for more than a quarter of the nation’s mortgage market.
Blend, based in San Francisco, posted a statement on its website about the investment by Salesforce, calling it a “partnership.” Again, it was short on details, such as the dollar-value of Salesforce’s investment.
In February, The New York Times listed Blend as one of 50 startups that may become “unicorns,” as investors call privately held tech companies valued at more than $1 billion. PitchBook valued Blend at $600 million three months ago.
The company’s digital platform uses artificial intelligence to streamline the mortgage application process. Blend co-founder Erin Collard has said the company’s technology cuts about two weeks off the time it takes to get a mortgage.