AI Proptech Pulls In VC, But Investors Say The Real Reshuffle Is Still Ahead

As artificial intelligence shakes up markets, venture capital is moving away from traditional software models and toward AI-native platforms, shifting the proptech investment landscape.

But even as AI-powered products draw in dollars, proptech investors face questions about the future of the industry, including how software as a service will be incorporated, if at all, and how much real estate firms will need to rely on bespoke AI systems to stay competitive. 

“Anybody not seeing this shift as a core aspect of what they're investing in is going to be meaningfully compromised as an investor,” said Clelia Peters, founder and managing partner of VC firm Era Ventures. 

Venture capital investment in proptech reached $16.7B in 2025, a 68% increase over the previous year, according to the Center for Real Estate Technology and Innovation. And while AI-native companies still make up a much smaller share of this funding at about $4.5B, their piece of the pie is growing fast.

AI companies grew their share of proptech VC by 42% year-over-year, compared to 24% for their SaaS counterparts.

Some recent funding announcements highlight the shift among investors toward AI-powered tools instead of SaaS products that were magnets for capital just five years ago.

One of the largest VC proptech investments made in February was $350M to Kiavi, which uses AI for valuations, documentation and loan approvals. Three new proptech unicorns have been created since July, and all three are AI-native, including Bedrock Robotics with a $1.75B valuation.

But while there is agreement that a fundamental shift is taking place, there’s also broad uncertainty facing proptech investors, which are trying to analyze a rapidly changing landscape and place bets on which technologies could come out ahead.

“Technology has happened so fast that every venture investor is kind of taking a step back and saying, ‘Let me see what's going on,’” said Brendan Wallace, CEO of Fifth Wall, a proptech VC firm.

Basing a product on AI, especially early in a company's existence, can offer higher cash flow, lower headcount and, ideally, better margins for investors, according to Dan Mosher, CEO of DealGround, which uses AI to streamline prospecting for brokers. 

Even five years ago, its model would have required substantial investment in engineering and painstaking analysis of PDFs. Today, a relatively lean team, with just a handful of engineers, can train large language models to create a new, proprietary dataset on leases and ownership that Mosher said adds up to a powerful prospecting tool.

The startup has more than 1,000 customers, including users representing the nation’s top 15 brokerages, according to Mosher. Last year, the company raised $1.1M in a preseed round.

A number of different outcomes are possible as proptech weathers the changes brought on by AI. Traditional SaaS could simply be replaced by firms with ever more capable AI tools, or companies that have invested in better data — including incumbents — could come out ahead. 

Or, agentic AI, a newer, more powerful artificial intelligence that operates in a loop to take in information and use it to make decisions and create workflows, could appeal to large CRE firms, allowing them to create their own bespoke AI clients and tools in-house.

“A decade ago, I would have said the notion of DIY software in the real estate industry was a bad idea,” Wallace said. “That actually might be wrong nowadays. That means that real estate organizations are going to have to start building their own tech internally in a way they never have before.”

Wallace pointed to an early March announcement by Welltower, a firm developing AI and data science models, and Public Storage, a self-storage REIT. Public Storage committed to licensing bespoke models from Welltower, with an aim to “deploy capital with greater velocity and precision on granular acquisitions to ultimately achieve stronger risk-adjusted returns.”  

“​​It's no longer sufficient just to adopt point solutions and vertical software and change your business,” Wallace said. “And that realization has dawned on most big real estate CEOs sometime in the last 12 months to 30 days, and they’re all trying to figure out what to do.”

But despite the so-called “SaaS-pocalypse,” which predicts that increasingly robust AI capabilities will displace traditional software companies, Peters doesn’t believe that fate is necessarily a foregone conclusion. 

For instance, many of the large, ingrained property management systems in real estate tech, such as RealPage or Yardi, have significant, accrued and proprietary data from their clients, which positions them well in the current AI era. 

She predicts many of them will start being acquisitive and roll up small to midsized AI-enabled companies to expand both their capabilities and datasets. Peters also sees incredible opportunity in new construction tech companies, since there’s increasing opportunity to collect new data about construction processes and make projects and labor more efficient. 

One constant in all of these scenarios is the need for companies to continually take in new data and adapt to changing environments.

The constant tweaking of agents to better analyze private datasets will be both a challenge and a business opportunity. It is, in part, solving what tech consultancy Mill5 calls an optimization problem, in which significant investment in AI by larger corporations is followed by additional, unexpected investment in customization and training.  

Wallace pointed to EliseAI, a proptech unicorn that provides an operating system for apartment owners and operators and has started to build teams to go in-house with clients to train the organization on adoption and integrating AI. He sees this additional service layer as necessary for success.  

“The layering of services with technology is a trend that you're going to see more and more in our space,” Wallace said. “The companies that win will layer that or pair that with some kind of services or integrate a product, right, and actually change companies from the inside out.”