Recently Public Real Estate Startups Have Lost 85% Of Their Opening Value

You'd be hard-pressed to find a more efficient way of losing money over the last two years than investing in real estate startups when they went public.

Venture-backed real estate companies that went public in the last two years have lost an average of 85% of their debut value, according to an analysis by Crunchbase. The losses from these companies — which include Opendoor, WeWork, Compass, loanDepot and Vacasa — total more than $42B. None of them have gained value from their opening price.

There are a number of headwinds that are buffeting these stocks, including overly optimistic initial valuations, dampening investor demand and a general shift in the U.S. real estate markets due to rising interest rates, according to Crunchbase.

Some of the companies on the list also underperformed expectations or are embroiled in their own problems. Despite being valued at $8B, Compass posted a Q2 2022 net loss of $101M, a massive jump from the previous year's $7M loss. The brokerage firm has been laying off employees in a restructuring effort.

Opendoor is facing its own struggles, including problems in the iBuying industry. According to a recent report, Opendoor saw a 42% drop in value in homes it sold in August 2022, and the company paid $62M to the Federal Trade Commission for misleading home sellers.

But private investors haven't been deterred so far this year, according to Crunchbase, pumping some $4.6B of seed capital into growth-stage U.S. startups tied to real estate, including Veev, a construction tech firm that raised $400M earlier this year, and Adam Neumann's Flow home rental platform, which raised $350M from Andreessen Horowitz this summer.

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