Last year big-name real estate investors lined up for a stake in Dealpath, a deal-flow management and analytics software startup. The already Blackstone-backed proptech raised USD $43 million in a Series C funding round led by Morgan Stanley.
Dealpath’s platform allows leading institutions like Oxford Properties to manage acquisitions, dispositions, development, and financing across teams with a single deal management platform, providing real-time visibility.
Prior to Dealpath, Mike spent over a decade growing venture-backed software companies including Fanhood (acq. by FOX), Zynga (NASDAQ: ZNGA) and OneSeason (acq. by Cantor Fitzgerald).
Explain to us what Dealpath is and what your motivation was for founding the company.
MS: I co-founded Dealpath back in 2014 along with Andy Lee and Kenter Wu after initially beginning a career in real estate finance, where I had the opportunity to see how large-scale private equity firms manage their data on the backend. From there I got pulled into software development and then embarked on growing my own venture-backed software companies.
During that time, friends and former colleagues in real estate began sharing their challenges and requests for innovative solutions; founding Dealpath became our answer to these needs. Dealpath has since become the real estate industry’s leading deal management platform, with 7 of the top 10 institutional investors choosing our platform to streamline their deal processes.
Dealpath opened its Toronto Office in June of last year. Why were you looking to expand into this market?
MS: We see the opening of our Toronto office as an essential addition to our company base and has enabled us to begin expanding our operations both in Canada and globally. Toronto has always been one of our key markets with institutional clients and has allowed us to tap into a huge hub of technology talent that will enable our company to have meaningful growth in this region.
We see our Toronto office as a global office that will serve our broader business and has been an opportunity to access core institutional capital invested in real estate assets in the region.
Dealpath’s Canadian client base is comprised of leading names such as Oxford Properties, First Capital, Fiera Real Estate, and Manulife Investment Management. How has the Dealpath platform transformed the way these companies handle deal flow?
MS: Dealpath was built to empower these investors to make the best investment decisions. From pipeline tracking to portfolio management, Dealpath is the top and bottom of the funnel for our clients, and has enabled them to centralize their data with configurable workflows for evolving business needs and provide the enterprise data security that they require. Being able to have a command center like Dealpath that allows all pertinent parties to have easy access to real-time data and insights has created operational advantages that these businesses have never had before.
In the past, the sharing of information was done manually through emails, spreadsheets, and disjointed tools, which understandably led to inefficiencies and limited the ability to scale with speed and precision given the amount of knowledge that was being shared through an incredibly antiquated method of collaboration. The adoption of software platforms like Dealpath has really streamlined these antiquated processes and brought investment management into a new digital age that leads to better and faster execution of investment strategies.
What differences, if any, have you seen in terms of the rate of adoption for a platform like Dealpath in Canada vs. the U.S?
MS: In both the U.S & Canada, there’s been a huge wave of adoption when it comes to tech-enabled solutions. Today, a majority of real estate assets are owned by institutional investment management firms that have professionals who are constantly looking for new opportunities and have risk-reward mandates that they need to deliver on, and with that there are clear economies of scale in real estate investment management. The top institutional investors are acquiring massive portfolios and raising multi-billion dollar funds to benefit from the advantages of scale. The big players are only getting bigger, and that has created more of a need for technology that will allow them to operate at scale and work with speed and precision.
2021 was a banner year in terms of venture capital investment in PropTech, and the space is maturing rapidly. We’re seeing an adoption wave as the market is realizing the benefits from new solutions that have come to market over the past few years as a result of how venture capital has been poured in to bring them to market, and its reached a point where these technologies are no longer a “nice-to-have” but a “need-to-have” in order to keep up with today’s pace of business.
What general trends are you seeing in terms of where capital is moving within the Canadian real estate market?
MS: Dealpath has observed increased capital formation and activity in debt and structured equity. Presumably, investors are seeing more compelling risk-adjusted returns at the higher end of the capital stack and with more protective provisions. We also see high interest in property types that have shorter lease durations that may participate in inflation such as Multifamily, Industrial, and Hotels. We also hear of investors who are seeing value in niches of segments that have been considered out of favor in recent periods such as Retail and Office.
What lies ahead for Dealpath in 2023?
MS: After a banner year of company milestones in 2022, including strong client growth and industry-leading engagement and retention, expansion into Toronto, and our $43M Series C, we are really excited for what’s next for Dealpath in 2023. We’re in growth mode and are focused on continuing to build out our platform as well as our teams.
Our expansion into Canada was a great first step into growing into a global business and we hope to continue that trajectory into 2023 and beyond as our platform continues to be a crucial asset to our client base.