Real estate is often the largest asset people own, but when it comes to venture investment, large bets in the sector don’t always pan out. The list of failed or underperforming real estate ventures from the past few years includes well-funded companies like WeWork, iBuyers such as Opendoor and Offerpad, and construction disruptors like Veev and Katerra.

More recently, as investors increasingly explore the intersection of AI and real estate, the trend is shifting toward less capital-intensive investments. Deals are happening, but unicorn valuations are becoming rare.

So far this year, startups applying AI to real estate-related sectors, such as property management and construction, have raised just over $200 million. Investment is on track to surpass last year’s totals, though it remains below the record highs seen in previous years.

These funded startups span various sectors, including rental management, drone-delivered site inspections, and building energy efficiency.

Key Fundraisers in AI and Real Estate

The largest funding recipient in the past year was New York-based EliseAI, which raised $75 million for its automation platform serving the housing and healthcare industries. Its AI-powered property management tool handles tasks like rental inquiries, tour scheduling, maintenance requests, and other routine activities.

Santa Monica-based Zeitview also secured $60 million in March to fund its drone aerial inspections for applications in construction and building management.

Another strong fundraiser, Montreal-based Dcbel, raised $55 million this month to scale its system that connects home energy devices to smart grids and energy markets.

In addition to these larger rounds, there has been a steady flow of smaller funding rounds. Among companies funded this year in the AI and real estate space, the median round size was approximately $4 million.

A Shift Toward Smaller Deals

Typically, reductions in total funding and smaller average round sizes signal pessimism in a sector. However, for real estate, this trend may indicate that investors still see potential in the industry but are more cautious about capital-intensive business models that were popular during the previous boom.

Gavin Myers, managing partner at Prudence, a venture firm focused on real estate and construction, commented on the issue: “It frustrates us to see dollars improperly allocated to our sector.” Despite the challenges, Myers is optimistic about deal flow in emerging areas, particularly tools that bring greater efficiency to sectors like construction, real estate sales, and property management.

He added, “There’s more demand for solutions than there are good solutions available.”

Prudence’s most recent investment was a $4 million seed round in Uniti AI, an AI-powered real estate leasing agent. The firm also participated in a $13.5 million Series A for Planera, a company developing software for sharing information between office teams and field teams on construction projects.

Opportunities in AI and Real Estate

According to Myers, one of the advantages of AI tools is that founders can use them to develop products and reach the market more quickly and affordably than traditional methods allowed.

Exit Opportunities in AI and Real Estate

While the pace of large startup exits has picked up recently, real estate-related companies have not been part of this trend. However, we did see a significant IPO in late 2024 from home service contractor platform ServiceTitan, which is closely tied to the real estate sector. Though the company’s shares are down from their highs, they have held steady, and ServiceTitan is currently valued around $8.5 billion.

Looking ahead, the opportunities in real estate remain substantial. With rising construction spending, rents near all-time highs, and home maintenance costs at record levels, there has never been a better time for AI-driven solutions to tackle challenges in the real estate sector.