Tech stocks and cryptocurrencies have been dramatically falling in the last few weeks after the market peak in January. This was the longest weekly losing streak since the crises of 2008. It certainly piqued our (P)interest (down c.40% since the start of this year). The wider crypto market wiped out almost $1Tn in value last month. Crypto’s decentralized philosophy means with no central bank intervention capability to “bail out”, its fallibility is clear.
Approximately 14% of all global wealth has been wiped out since the beginning of the year + even Softbank said it will cut start-up investments by 50% to 75% through March 2023 (it announced its biggest ever annual loss of $13.2Bn). Has the Son finally set on Masayoshi’s bold strategy?
Yikeser - so surely it can't get any worse?
It’s still not certain if the (heavy) sell-off is over and if there is a bottom signal, only time will tell. Uncertainty is high, from the war in Ukraine to high oil prices, lockdowns in China and food crises potentially on the horizon (India halted exports, Sri Lanka close to default and Pakistan removed their President). All early stages of what’s most likely imminent, a pull back from the heady heights over the last years, with a recession, highly-likely.
How will this affect Proptech + funding?
We are already sensing caution in the market. Not withdrawal, but caution.
However, there is a lot of dry powder swilling around. Moreover, the propensity for Proptechs valuations to be more aligned to executed metrics than other tech -industries where the TAM + scalability make for these large, often, hard to justify valuations (+ drop off), this as an opportunity for Proptech.
Furthermore, there is a rush of atypical Proptech investors more prevalent in deals + this week we met a number of new, deep pocketed investors who are keen to penetrate the ecosystem.
The headwinds of the economies which companies operate in cannot be ignored. However, the idiosyncrasy of real estate means that although harder to scale, in the downturn it is well protected. It could be the genuine shining bright light in a tech world enveloped with darkness.
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