[Editor’s note: Originally published on the Thomvest Ventures blog.]

I’m excited to release Thomvest’s 2022 real estate technology market map, which includes more than 275 companies operating within the residential real estate segment. This is the fourth update to the market map and includes over 70 new companies this year — a testament to the pace of entrepreneurship in this category.

This market map real estate technology companies operating across every phase of the home purchase value chain. These companies have collectively raised more than $35B in venture capital, and range from seed stage businesses to public companies.

Much has changed over the last year in the housing sector — a sharp rise in interest rates has flipped market sentient from frenzied to fearful. Following record home price appreciation over the last two years, housing sales have largely stalled and mortgage originations are expected to decline by more than 40 percent year-over-year. Many real estate technology companies generate revenue on a transactional basis, meaning a softening housing market has a direct impact on revenue growth expectations. As a result, public real estate technology companies across every category have traded down meaningfully from their 2021 peak.

So amidst this doom and gloom, where do we find silver linings? First, I continue to be a deep believer in the positive role technology plays in making real estate transactions more efficient, more data-driven, and more equitable. The long-term vision of these businesses remains compelling despite recent headwinds. The problems technology companies are solving are systemic in the real estate sector, and are relevant no matter the macroeconomic environment. Second, the fundraising environment for real estate technology companies continues to be robust despite year-over-year declines in transaction volume. Venture capital activity in the sector has reached nearly $7 billion through the first three quarters of 2022 and total fundraising for the year is on track to be surpass $9 billion.

At Thomvest, we’ve long been excited about the opportunity to bring technology into the real estate segment, and have been fortunate to partner with many great companies. We believe that challenging market environments ultimately create durable companies, and we are excited to continue investing in the real estate vertical. The pandemic highlighted the role technology can play in the real estate transaction experience. In addition to tailwinds around technology adoption in real estate, we’re particularly excited about a few areas within the housing value chain:

New core infrastructure in mortgage, from borrower acquisition to servicing

The mortgage industry has faced several headwinds this year — rising interest rates, limited housing supply, and record-high home prices impacting affordability. After two record-setting years of loan origination volume, the mortgage industry is contracting, sharply. Non-bank mortgage lenders on average lost $82 per loan in Q2 2022, according to the Mortgage Bankers Association. To survive, lenders must do more with less resources, and they will turn to technology partners that enable automation, delight customers and drive down cost. These companies will directly benefit from the last decade-plus of venture funding in the mortgage technology industry — they will have their pick of best in class technology across point-of-sale, underwriting, loan origination, loan processing, closing and servicing systems. A better technology stack will allow lenders to originate loans more cost-effectively — and to ultimately evolve into more agile organizations that can thrive despite the inherent cyclicality of the mortgage sector.

I also believe that now is the time to innovate on new products in the home finance category. While the 30-year mortgage is a cornerstone of American housing, too many prospective homeowners have been blocked from purchasing a home amidst rising home prices, rising interest rates, and declining credit availability. There are a growing number of startups building “hybrid products” that blend renting and owning, or create a smoother onramp between the two — like LandisUp&Up & Divvy. Other platforms are emerging that enable co-ownership of real estate, like Fractional. I’m excited to spend time with companies innovating at the intersection of housing and finance over the coming years.

The rise of “indie” real estate investors, enabled by new ownership models

This year’s market map includes a new section — “Rental Investment Platforms” — which represents the many startups enabling individual investors to invest in real estate. These platforms lower the barriers to entry for investing in real estate. And collectively, they offer several distinct “flavors” for ownership — from fractional, passive investing opportunities (ArrivedLofty), to single-asset purchases (RoofstockDoorvest), to real estate fund investments (FundriseKeyway).

Combined with a burgeoning ecosystem startups in the rental management space (like BaselaneObie and Mynd), landlords are now equipped with a powerful set of tools for building a portfolio of investment property, at any scale. Ultimately, individual investors will be able to create rental portfolios similar to the way they build stock portfolios — giving more Americans a new way to build wealth within the real estate asset class.

A few relevant links:

  • A high-resolution version of the market map can be accessed here.
  • The full list of companies included in this market map is available here.
  • Please note that while I try to be as comprehensive as possible when compiling these maps, I will inevitably miss several great companies. If you’d like to add a company for future inclusion on the market map, you the form to do so is available here.
  • My commercial real estate market map is available here. I plan to publish a 2022 update to this map next month.