JULY 4 2023

Published in The Australian Financial Review

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Property technology start-up Inspace has bucked the harsh venture capital environment to bank $6 million in a funding round featuring money from Facebook co-founder Eduardo Saverin’s venture capital firm B Capital and Our Innovation Fund.

Inspace, which lets buildings be viewed remotely in 3D, said it intended to use the new funds to build artificial intelligence capabilities. The AI will aim to automatically generate transaction and marketing documents and provide predictive insights to identify prospective tenants, Inspace chief executive Justin Liang said.

“AI will be a big focus for us as it is for the rest of the world right now,” Mr Liang said.

“But specifically, we’re [looking to] help our customers automatically create those documents, which today is done very manually.”

B Capital said its investment into Inspace reflected Mr Saverin’s strategy of investing in technology that “revitalises existing industries, allowing them to adapt to a changing environment”.

Mr Saverin was best known for co-founding Facebook, and gained widespread fame following the 2010 movie The Social Network’s depiction of his booting from the company by chief executive Mark Zuckerberg.

Since leaving Facebook, Mr Saverin – now a multibillionaire – has become an active tech investor. Along with B Capital, he has financed global start-up generator Antler.

OIF co-founder and former Cromwell chairman Geoff Levy, who led Inspace’s seed round in 2021, said the VC fund provided a follow-on investment as many property investors were trying to exit their investments amid the commercial property reckoning.

Inspace’s subscription revenue has also grown by almost four times since then.

Mr Liang declined to provide Inspace’s valuation after the latest funding round, but said investors were placing a stronger emphasis on profitability, unit economics and customer feedback than in previous years, which had created a tougher investment environment.

Like software companies, proptech companies experienced an exuberant bull run in the decade up to 2021, thanks to a prolonged period of cheap money and investors eager to generate returns in high-risk investments. But the days of proptechs accessing easy money appear to be over.

AirTree Ventures-backed proptech :Different went into voluntary administration late last week, and former Macquarie Group managers Simon Kinsey’s proptech Yabonza collapsed last year.‍

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Proptech opportunities in real estate pain‍

Despite tougher conditions in capital markets, Mr Liang said there were opportunities for proptech growth, especially in the US market where $2.3 trillion of commercial real estate debt is due for repayment by the end of 2025.

He said Inspace’s biggest focus would be expanding its US presence in the US market, where occupancy rates have dipped to a record 12.9 per cent.‍

Last week, Commercial agency JLL estimated that office buildings in New York – the world’s largest office market – had lost $US76 billion ($113.9 billion) in value from their most recent sales prices.

“One of the things we’re focused on working with our customers on is in raising and retaining capital,” Mr Liang said.

He said usage of Inspace’s virtual inspection platform had led to 87 per cent more online views for landlord customers’ commercial buildings, which had led to increased occupancy rates.

Three years since launching, Inspace’s platform has been used in $130 billion worth of property transactions. It can also count the likes of Dexus, Mirvac, JLL, CBRE, Blackstone, Brookfield, ESR and Lendlease as customers.