It’s no longer just an issue of oil and JR.
Dallas, long known as the center of the real estate industry, is building on its history in the real estate market to replace Austin as the state’s, and perhaps even the nation’s, premier prop tech hub.
Real estate giants such as Trammell Crow Company, CBRE and Transwestern have deep roots in Dallas, and proptech has grown since COVID-19 prompted many businesses and individuals to move to the area, experts say. It is said that a market that attracts new companies is forming at an accelerating pace.
Since 2020, 17 proptech companies have been headquartered in Dallas, according to Ashkan Zandier, managing partner and industry chairman of the Center for Real Estate Technology and Innovation (CRETI), and CRETI itself has been headquartered in Dallas during the pandemic. The company reportedly moved from New York City to Dallas. .
“Since then, $2.3 billion has been invested in equity rounds of Propeller Tech companies, including $450 million in Dallas-Fort Worth-based Propeller Tech companies and $860 million in Austin-based Propeller Tech companies. Invested in PropellerTech companies,” Zandier said.
Those investments include a $43 million investment in CrowdStreet, an Austin-based commercial real estate investment platform; $20 million in TestFit, a Dallas-based site planning software company; and $15 million in SetPoint, an Austin-based warehouse securitization management platform, he added. Additionally, since 2020, 47% of Dallas-Fort Worth-based proptech companies have raised pre-seed rounds and 24% have progressed to seed-stage rounds, Zandier said.
Among the proptech startups attracted to Dallas is VERO, a rental management platform that aims to eliminate application fraud and streamline leasing, said founder and CEO Lou Bauzier. He said he was very happy with the location choice.
“The Austin scene is much more engineering-heavy, which means a lot of tech people are concentrated in a small town,” Bauzier said. “Dallas is a much more balanced community in terms of industry, with a lot of people in oil and gas, finance, startups, and real estate. A lot of the people I interact with are in real estate or tech. I think the combination of both is what makes Dallas different from Austin. Austin doesn’t have a similarly large real estate community.”
VERO started in New York in 2018 and relocated in 2021.
“This move not only met expectations, it exceeded them,” Bauzier said. “We fundamentally changed our business as a result of moving to Dallas in terms of knowing what to build for the broader United States rather than building a New York-specific product.” It’s a very easy trap for companies and product companies to fall into New York-specific problems that don’t apply nationally. There is a sex.”
RE Analytics, which abstracts real estate cash flow documentation, is a Dallas-based startup that is also benefiting from the region’s real estate market, said George Verschlow, the company’s founder and president.
“I’m from Pittsburgh, but I went to business school at the University of Texas at Austin, graduated in 2000, and got my first job at a private equity shop in downtown Dallas,” Barklow said. “Austin was a great city for tech, but maybe not for real estate. I wanted to go into real estate, and Dallas was the city.”
“We don’t really hire tech people. We’re more of a real estate company with a technology platform. That’s basically why we’re here. There’s a lot of analysts and real estate talent here, so we’re probably not lacking in our employment base.”
Matthew DeSarno, a longtime Texas resident, former FBI special agent and chief of the FBI’s Dallas field office, is now the CEO of Verfico Technology, a Dallas wage guarantee company specializing in the construction industry.
“Last year, $50 billion in wages were stolen from American workers,” DeSarno said. “Verfico helps prevent wage theft and level the playing field by shining a light on fraud, theft and fraud in the labor market. We make sure the money you invest in your projects reaches the workers who build your success in the last mile.”
Verfico, founded in November 2022, has been selling to general contractors and subcontractors since 2023 and is gaining momentum in the market, DeSarno said. “This is a great place to start a business because it’s growing fast. There’s a lot of money here. The tech capital of Texas has always been Austin, but Dallas has also grown a lot. The main industry is real estate, which is where a lot of great real estate tech companies come from. We’re a bit bootstrapped, but there are a lot of venture opportunities locally, not just in New York or San Francisco. .”
One Dallas-based venture capital firm specializing in real estate technology is LPC Ventures, a division of Lincoln Property Company, said LPC Partner and Innovation, which oversees emerging technologies for Lincoln Property’s platform.・Vince Cicciarelli, Vice President of Ventures, said: LPC is also looking to invest in early-stage technology and venture deals.
LPC, which began operations in January 2019, is far from alone in funding proptech entrepreneurs in Texas, Cicciarelli said.
“In Dallas, we are seeing more and more groups regularly participating in conversations and participating as advisors in various capacities in proptech funding rounds,” he said. “It’s become more common in the last few years. I would say the majority of the trade and activity still comes from the West Coast, but with the pandemic, people moved to Austin and now they’re relocating for various reasons. , we’re increasingly hearing from groups based in Dallas, including the infrastructure, stakeholders, and decision-makers that are here, as well as the connections between the West Coast and the East Coast in Dallas. ”
The large number of real estate customers and the availability of capital are fertile ground for the success of Dallas-based proptech startups such as Dotid, a workflow platform for managing commercial real estate teams, portfolios, and data, and ParkHub, a parking technology software company. It has been proven that.
But the networking and support needed for emerging proptech companies is still being built in Dallas, said the director of growth at Chicago-based RealtyAds, an AI-powered CRE advertising platform for brokers and tenants. said Matt Newbill, vice president. Dallas.
“Right now, we don’t have a strong community of collaboration and innovation,” says Newbill. “I think a lot of the proptech companies that started in Dallas are isolated behind a work-from-home model and have to run around to attend conferences or fly across the country to sit on panels and discuss their ideas.” But in the post-COVID Dallas community, a lot of family offices are relocating here and a lot of capital is flowing in. Now, a lot of innovation engineering programmers live in and around Texas and Dallas.
“With Vince [LPC Ventures’ Cicciarelli]Our vision is to create a community where innovators, VCs, and owners can meet once a month and discuss what’s happening in the market, what’s working, what’s not working. We’re creating that space because right now, no such space exists in Dallas. The only reason we’re creating it is because in Dallas, most innovation happens over email, not in person.”
Another real estate tech industry connector in Dallas is Caroline Frith, CEO and founder of Banksia Advisory, a commercial real estate technology consulting firm founded in early April.
Originally from Australia, Frith has lived in New York City for many years and has become a passionate advocate for Dallas.
“I think it’s probably overtaken Austin, but Austin is still an attractive place for tech startups,” Frith said, “but Dallas has a lot of equity. It’s a growth market in that there’s demand for office space and there’s demand for multifamily housing.”
“I’m in Preston Center, which is like uptown Dallas, and it’s like a mini-CBD hub, and I have three or four proptech companies within walking distance of me. So I definitely feel like Dallas is going to be a formidable competitor to Austin very soon.”
Philip Russo can be reached at prusso@commercialobserver.com
