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Let’s take a look at the world of proptech today, as we meet an investor in charge of a corporate accelerator.

What is Angie Mahtaney’s take on the current early-stage proptech space? Find out below.

But first:

• Cambridge Future Tech and Arup have announced plans to co-develop Deep Rack Venture Studio, with the aim of creating 16 new startups “focused on solving system-level bottlenecks in data centre performance, resilience, efficiency, and sustainability, with particular focus on cooling, energy, density, and circularity.”

• Founders Unfiltered, a report series from Ninety Two Ventures, Sam Shaw Media, EY and Innovate Finance, is looking for early-stage fintech founders to spend 10 minutes filling in an anonymous survey. Fill in the survey here, and check out the previous edition here. Deadline for submissions is tomorrow!

– Martin

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How (and why) the ATechX accelerator is evolving its support for proptech startups

Who is Angie Mahtaney?

Angie Mahtaney runs the ATechX startup accelerator from real estate investment company Aroundtown.

While Aroundtown is based in Germany, ATechX has supported UK proptech startups like UpGreen, MapMortar, and Temperate.

Previously, Mahtaney ran a real estate accelerator programme in India, following a career in business running a clothing company and a juice brand.

This conversation has been edited for clarity.

MB = Martin SFP Bryant, AM = Angie Mahtaney

MB: Aroundtown has traditionally been a property investment company. Why has it become interested in startups?

AM: A few years ago, we started dabbling in venture. We started making investments, we started giving pilots, just to keep our finger on the pulse of technology that's moving the needle in the business. And as we did that, a couple of things became clear.

One was that innovation and tech adoption need to be at the forefront of the corporate strategy going forward. And number two was that in order for us to do this at scale, we needed to get structured and organised about it.

So how do you deal with early-stage startups? How do you deal with startups that are much later-stage, let's say Series B and beyond? And so over the last two years, we've become quite processed and structured about it, where I run ATechX, which has been until now, the early-stage startup growth programme, but that continues to evolve.

And then we've got the investment arm. We have a third arm, which is just pure deployments. We find a later-stage startup doesn't need the hand-holding that an early-stage company needs. We can plug-and-play, at least in theory, if they're solving a challenge that the business has highlighted. So those are the three ways we engage with venture now.

MB: What has your approach been to putting together a proptech accelerator?

AM: Accelerators sometimes have a bad reputation. They provide one-size-fits-all generic content. And where we try to set ourselves apart is the programme is customised for each startup based on the stage they're at, what we believe they need more of.

Some founders are great with pitching and fundraising, and don't need any assistance, so we don't spend any time with them on that. So it's curated for every startup, and the programme looks different for every startup. The objective, ultimately, for us is we want to provide business to the startups, because that's when we benefit. So I think the incentives are well aligned, and I think that's what makes us quite different from typical accelerators.

The most important thing is the startup has to be solving a pain point, and not just in theory, but the ROI to the customer has to be very clear.

For example, I've come across drone companies in the past that will do an assessment of rooftops, but they charge you €7,000; it's cheaper for me to send someone out to do it. So it has to have very clear ROI, and path to that ROI, for us to even consider that startup.

And then, especially with the early stage, then it's all about the founder, right? Are they good? Are they going to be able to execute? Are they going to be able to adapt to changing market trends, to our needs, to things that they find out?

Very often in the last year or so, we've seen startups that come with an idea, and the ones that really thrive and we see growing with us are those who really pay attention to the problems that we face. You’ve got to listen to what we're saying, the signals we're sending. And the ones that really do well are those that adapt and pivot their model or iterate their product. Those are the ones that we see sort of really thriving with us.

So that's how we think about it. It sounds very plain and simple, but it's more complicated than even I thought. There can be initially great ideas, but sometimes the path to the ROI is just not there. And so how do you then tweak the business, the execution to make the numbers work?

Our first lens is as a customer, because the whole value proposition and idea behind the programme is we want to adopt technology in our business. So we can give these startups business. We can validate the problem-solution fit, the pricing.

We also invest. We give the early-stage startups the things they need to go from zero to one quickly. What that means essentially is, at least in best-case scenarios, the startups will grow, the valuations will grow. It makes sense for us to ride that upside. So first and foremost is business need. If there's a clear business need and alignment of the startup and what our challenges are, then that tends to lead to investments as well, but that comes at the end of the programme.

MB: You're about to launch your third cohort. How has the accelerator evolved over time?

AM: We started out working with very early-stage startups because it takes them a lot of time to get customers. It’s great that VCs invest in early-stage founders, but then where are the customers coming from?

We believe that the white space has been real estate companies being able to invest time, resources, appetite for risk, to be able to really engage with these startups. So we started out saying we were going to do only early-stage, but what became clear over the first year is when the startup is very early-stage, it's very difficult for us to deploy in the very near future. It takes somewhere between 12 and 24 months. And so then it takes too long to meet the original goal of ATechX, which is to adopt more technology in the Aroundtown business.

So the major evolution has been there is a need, and there is room to play with both early-stage and later-stage.

Maybe an early-stage startup has done a friends-and-family round, maybe they've done a small seed round. They have a product, but don't have any large customers, aren't ready to engage with large enterprises. There is a role that we play there, and in our experience, it has been validating problem-solution fit, and making sure that they achieve product-market fit by the end of the programme.

From then on, we'll give them the capital, we'll continue to help them learn how to engage with large enterprise, whether it's cybersecurity, whether it's data privacy, there are various requirements, and a lot of these young startups don't know those things. We will hold their hands to do that, and that's the role that we can best play for early-stage.

But what became clear was there is a role that we can play for later-stage as well. By later-stage, I mean a company that's maybe done a seed round of over €1.5 million, they've got a tried-and-tested product, and they're ready to scale with us. We see them being able to be deployed in our business within three to six months.

Then the programme is focused around designing the pilot, deploying the pilot, and evaluating KPIs. Did we set out to reduce energy costs? Did we hit that? Did we not? What do we need to iterate?

And we’re thinking about how to scale the relationship. Because very often in this business, or in any sort of startup-enterprise relationship, you'll see pilots, and then they go to die; nothing happens. So it's really important for us to spend that time early to think about how to take this from, let's say, two assets to 50 assets. What's the plan? How do you mitigate risk? What do we need to see from both sides to enable that? That's the role.

So we're also now saying, going forward, let's have two programmes running simultaneously. One is the early-stage, where it's all about kind of validating problem-solution fit, and the second one for later-stage, where it's about the pilots. That's been the major area of evolution for us after a year.

MB: What is the wider property sector’s appetite for innovation at the moment? Is there a market for what tech startups have to offer?

AM: I see it increasing. Since we launched, we added several partners, both real estate as well as VCs, like Round Hill Capital and Vonovia, which is the largest residential real estate player in Europe. We go from being competitors to collaborators, because we see the need for adoption of tech, and we understand that the best way to do this is as an ecosystem, because each company has a role to play.

We can certainly mentor startups, but a challenge that another real estate company may have might be slightly different, and if we're trying to build and scale technologies for the industry at large, then they need a holistic opinion.

The response we’re getting from the partnerships we're building with really serious real estate companies sends me a really positive signal about the adoption and desire to adopt tech.

It's not as easy as plug-and-play, and I think that's why we're trying to take a structured approach to create sandboxes where risk is mitigated. Try with one small asset, look at the results, and share those results transparently so we can all learn from each other.

So overall, I'm seeing a really collaborative and positive approach to this. Every real estate firm has something. Some of them have hackathon challenges, some of them are starting CVC arms, or have CVC arms.

I can see it in the energy when I look at startups, even at an early stage. The pilots they are doing across the board in real estate companies, they send very positive signals about adoption of tech and the digital transformation of real estate.

MB: What kind of innovation are you looking for from startups? What kind of tech, and what areas is there demand for?

AM: I think for us specifically, it’s around ESG, EPC as per the European Energy Performance of Buildings Directive, are keeping us all up at night. So we want technologies that can help move the needle on that. And it's not just energy management SaaS solutions. We're looking for hardware too, like improved battery storage or renewable combined heating and cooling, because that's what we think will really move the needle on reducing energy consumption.

The second is asset utilisation: how do you use tech to improve your yield per square metre, whether it's tenant satisfaction, using data better to get higher quality tenants, or using new tech to improve space utilisation?

For example, in our second cohort there was a company called xNomad that connects global brands with owners of space so they can run pop-up stores. We did a Billie Eilish pop-up in one of our spaces. We're working with a lot more furniture stores as a new way for us to connect with potential tenants. So we’re looking at new tech solutions that can help us improve our yield per square metre. That's the second bucket.

A third big bucket is using AI with hardware like robotics and drones to improve our operating efficiencies. There's a massive shortage of labour in the West, so how do you use SaaS and hardware to mitigate some of those challenges?

Those are the really big buckets of tech that we're looking at for the moment. Obviously, it keeps evolving. In a year or so, we'll be looking at data-centre-based solutions: cooling efficiency or space utilisation in data centres, and things like that.

So it is moving constantly, and we're trying to find that balance between problems that we are solving today versus ones we anticipate three years from now.

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To apply to the third cohort of ATechX, founders can send a pitch deck to [email protected]

And if you happen to be in Berlin next month, ATechX is hosting a pitch night on Thursday 13 November.

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