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How Israel, the “Startup Nation,” Has the Potential to Disrupt the PropTech Industry

Israel has long been referred to as the Startup Nation. In fact, Tel Aviv boasts one startup for every 1,400 people, more per capita than anywhere outside Silicon Valley, according to a report by Startup Genome and the Global Entrepreneurship Network. Worldwide demand for Israeli innovation is on the rise, with an estimated $45 billion in M&A and IPOs since 2014. And as the real estate technology industry continues to expand, a growing number of Israeli PropTech startups are poised to enter the US market. Before you invest in new real estate solutions, it pays to check out what the nation’s PropTech companies have to offer.

According to Elad Hameiri, director of business development and growth at innogy Innovation Hub, “the Israeli PropTech market is very likely to penetrate the global one, due to its unique and original technological expertise.” Israel’s history of innovation can be traced in part to its compulsory military service, in particular, intelligence units, where young men and women are trained in analytics and encouraged to use data creatively. Furthermore, academic institutions in the country such as The Technion (Israel Institute of Technology) have long been breeding grounds for successful tech entrepreneurs. 

Collaboration between Israel and US technology companies also goes back many years, with Intel opening its first development facility outside the US in Haifa in 1974. Today, Intel is the largest tech employer in Israel with an estimated 12,000 workers. There are now approximately 220 American corporations with innovation-related activity in Israel, and over 650 Israeli tech companies have offices in the United States, according to Meir Valman, a senior analyst at Start-Up Nation Central.

Israeli startup exits include Waze, sold to Google for $1.3 billion; Mellanox, sold to Nvidium for $6.9 billion; and Mobileye, sold to Intel for $15.3 billion. Gig-economy platform Fiverr and website builder Wix remain independent, as well as content-recommendation engines Taboola and Outbrain. Israel also has a broad and diverse capital base including over 90 accelerators and 70 venture capital firms, with more than 200 international funds and 3,000-plus angel investors as of 2016, based on rankings by SparkLabs Global Ventures.

Israeli PropTech and construction tech startups include companies in a wide range of sectors, from planning and design, enhanced onsite execution, safety, property management and maintenance to real estate finance and investment.

According to recent collaborative research by Contech and innogy Innovation Hub, there are currently 120 Israeli startups operating in the Israeli PropTech landscape. Since 2015, it is estimated that $900 million has been invested in the industry, versus roughly $30 million before that period, and a strong upward trend is expected to continue into 2020 and beyond. 

Indeed, this movement has already begun to happen.  For example, one of the more established and successful Israeli PropTech companies operating in the US is Obligo, which offers a new financial standard to replace the security deposit. In 2018, the company announced it had secured $5 million in financing, as well as its first partnerships with New York City landlords Olshan Properties and Adam America. They are a great example of how technical proficiency along with innovative thinking can create completely new solutions for the built world. 

My company BuiltUp Ventures focuses on Israeli PropTech companies in the early stage. Based in Tel Aviv and New York, it was founded by experienced technology and real estate investment executives who saw an opportunity to help foster their country’s growing PropTech sector. Specific areas we focus on include logistics tech, retail tech and construction tech, with the goal of offering a 360-degree solution that provides real estate players with the pieces to complete every stage of the PropTech puzzle. 

One Israeli startup we have invested in is MTtech, a software and hardware company that creates interactive multimedia operating systems for homes and offices. In an era marked by a tendency to favor individual devices, we were impressed by the company’s functional technological solutions that encourage interpersonal interaction. For example, its flagship product Kisense is an innovative smart system that fully integrates with the home or office kitchen countertop. Kisense can be integrated into any standard kitchen, thereby changing the everyday home life of its inhabitants by providing easy inventory management, fun and collaborative cooking, and social interaction. Founded in Israel, MTtech now has offices in New York, Tel Aviv and Mexico City.

Another one of our portfolio companies making inroads in the US is Tel Aviv- and New York-based SolidBlock. The company is best known for the successful tokenization of the five-star St. Regis Aspen Resort in Colorado, using the crowdfunding site Indiegogo to raise over $18 million. SolidBlock utilizes real estate asset tokenization to transform real estate into a tradable financial product. This gives investors the opportunity to buy shares in a property without owning the entire building. 

We have also chosen MyTower, a PropTech startup offering an online platform for building managers and occupants as an investment. The platform offers personalized services including property management tools such as a BI (Business Intelligence) platform to anticipate user needs, as well as proactive and preventative maintenance, finance and legal management, and a unified property dashboard.

Leading international real estate company Gindi recently selected MyTower to provide a facility management solution for Gindi TLV, a new community in Israel featuring 1,400 apartments. MyTower created a shared platform for management and tenants, with the ability to communicate via email, push notifications or SMS to all owners and tenants in a quick and easy way. The platform also reduces management costs, in addition to improving the overall resident experience. In November, MyTower announced it would begin offering these services to real estate owners in the United States.

Israel is home to a lot of talent when it comes to cutting edge computing like AI. Tel Aviv-based Innovesta, is one that we have chosen to back alongside the Israeli government’s Innovation Authority. Powered by a combination of AI, curated crowd-based insights and machine learning algorithms, Innovesta gives investors the objective, validated data they need to make informed decisions about startups in real estate and other sectors. The company’s flagship product Innodex enables users to research and manage private investment assets through a highly personalized process. In particular, it allows real estate investors to evaluate properties and manage multiple deals, giving them the tools they need to reduce their risk and make smarter decisions.

The Startup Nation is ideally positioned to offer a technological solution to each stage of the real estate process, thus creating a comprehensive ecosystem. What sets Israeli PropTech companies apart is their ability to bring advanced technologies from other fields – such as cyber automation and blockchain – and adapt them to the real estate and construction worlds. As a result, we now see technologies that evolved in the Israel Defense Forces, educational institutions, incubators and other areas geared towards optimizing the real estate world, with demand growing in a number of sectors including property management, construction, digitization of real estate assets and their fundraising, AI decision-making tools, robotics, materials, and more. 

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