By Nick Hughes2019-09-12T23:00:00
With money pouring into the proptech sector thanks to the likes of flexible office giant WeWork and venture capital firm Fifth Wall, Nick Hughes asks what risk there is of a new bubble forming.
WeWork’s $47bn valuation has generated plenty of debate in recent months, with the likes of Gandel highlighting the mind-boggling scale of its losses ahead of its planned IPO.
More bullish commentators, on the other hand, point out that WeWork is not a one-dimensional business – it also owns and manages its own assets – and that sky-high valuations are indicative of a company disrupting the property sector with an entirely new business model. Amazon, lest we forget, burned through hundreds of millions of dollars before it became the pervasive money-making machine it is today.
The flipside of the Amazon success story was that when the dot-com bubble of the late 1990s burst, many internet start-ups that had attracted huge investment went to the wall leaving investors counting the cost.
With money pouring into proptech, what risk is there of a new bubble developing? Or are we simply seeing, in the words of one senior proptech executive, a “WeWork bubble”?
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