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96% of proptechs fail to get to series A funding – here is why
Thought Leadership by Andrew Stanton, CEO Proptech-PR
The proptech sector has never been short of ideas. From AI-driven valuations and digital conveyancing to smart buildings and tokenised real estate, innovation in property technology continues at pace. Yet despite the apparent appetite for disruption, a significant number of proptech startups struggle and ultimately fail to raise external funding.
This is not simply a function of market cycles or investor caution. In many cases, proptechs fail to secure funding because of structural issues in how they are conceived, positioned, and executed. Understanding these pitfalls is critical for founders, investors, and industry stakeholders alike.
As I enter my ninth year helping Proptech founders get from MVP to exit, I thought it useful to explore from my expereience the most common reasons proptechs fail to raise funding, and what can be learned from them.
Solving a problem that doesn’t really exist – a great idea in the bath should stay there
One of the most frequent issues investors encounter is solution-first thinking. Many proptech founders build impressive technology without validating whether the problem is sufficiently painful, widespread, or urgent. Property is an inherently conservative industry, and if a startup is addressing a nice-to-have rather than a must-have, adoption will be slow, which investors recognise quickly.
Vanity projects, or ideas dreamed up in the shower, or ‘personal stories’ of woe around pain points in the plan, build, sale, lease or management of buildings, should come with an investor health warning. The amount of multi-million failure proptech guzzlers who produce a stubborn £15,000/£30,000 a month of revenue, against costs 50 or a hundred times that size is considerable.
Typical warning signs include weak evidence of genuine customer pain, early traction driven by curiosity rather than repeat usage, and buyers who express interest in the product but are unwilling or unable to allocate budget to it. If customers are not actively searching for a solution, investors are unlikely to fund one.
Long sales cycles and slow adoption
Proptech companies often sell into estate agencies, developers, housing associations, and large corporate or institutional organisations. These buyers are typically risk-averse, budget-constrained, and highly bureaucratic, which leads to long and unpredictable sales cycles that can range from six to eighteen months.
Many startups underestimate the complexity of procurement processes, the impact of compliance and legal requirements, and the number of stakeholders required to sign off on purchasing decisions. When revenue growth is slow and difficult to forecast, even technically strong products can become unattractive to investors.
Founders who don’t understand the property Industry
A recurring issue in proptech fundraising is a disconnect between founders and the realities of the property industry. Founders from purely technical backgrounds often underestimate the complexity of regulation, the reliance on legacy systems, the fragmented nature of the market, and the deeply ingrained behaviours that define how property businesses operate.
Investors in all sectors, commercial realestate through to residential, office and home assets, look closely at whether the founding team has direct experience in property, access to credible industry advisors, and a clear understanding of how purchasing and decision-making processes actually work. Without this credibility, startups struggle to sell effectively, and investors struggle to believe the growth narrative.
Overestimating market size – and the cost to penetrate a possibly saturated market
Many proptech pitch decks attempt to justify large funding rounds by referencing the trillions of pounds or dollars associated with the global property market. Investors tend to view this sceptically, as they know that most proptech businesses address only a narrow function, operate within a specific geography, and serve a limited customer segment.
If the realistic serviceable market is too small to support venture-scale returns, funding becomes difficult to secure, regardless of how large property is as an overall asset class.
Also many times I have seen zero thought on the GTM, and cost of acquisition of new clients, all of which are the beating heart of scaling a company.
Andrew Stanton Executive Editor – moving property and proptech forward. PropTech-X
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