Brendan Wallace, co-founder and CEO of real estate technology investor Fifth Wall, explains how AI is driving a shift in proptech investments toward broader horizontal software solutions and real estate businesses that integrate autonomous and robotics technologies.
- AI fuels a move from vertical proptech to horizontal software platforms.
- Full-stack real estate companies integrating AI and robotics are attracting large investments.
- Traditional proptech funding totals may understate actual capital flow into the sector.
What happened
Brendan Wallace discussed the changing landscape of proptech investment during a recent interview, noting that technology in real estate is shifting beyond narrowly defined sector startups to include horizontal software and companies that directly build and operate physical real estate properties. Fifth Wall recently invested $135 million in Atoms, a company that does not fit the classic proptech label but is emblematic of this new wave. Additionally, Fifth Wall backed Higgsfield, a horizontal software company providing advanced visualization tools now being adopted in real estate for immersive property experiences.
Wallace highlighted Fifth Wall's evolution since its founding in 2016, emphasizing its focus on technologies that impact real estate finance, construction, and management. The firm manages billions of dollars with notable investments in firms like Procore and OpenDoor and has strong connections to major real estate and hospitality players such as CBRE, Hilton, and Marriott. These strategic ties provide a direct customer pipeline for the startups in Fifth Wall’s portfolio.
Why it matters
The shift prompted by AI reduces the need for real estate companies to purchase and implement narrowly focused software solutions since many of these can be recreated in-house. Instead, investors and operators are favoring more versatile, cross-industry technology platforms that provide superior capabilities and scalability. This trend represents a transformation in how technology integrates with real estate, emphasizing automation, autonomy, and robotics alongside traditional digital tools.
This broadening investment focus means that conventional proptech funding metrics may not fully capture the volume and diversity of capital flowing into the sector. Companies formerly considered outside proptech now contribute substantially to advancing the industry. For founders, this shift may open new opportunities but also raises the bar for developing proprietary technology that cannot be easily replicated internally.
What to watch next
Industry observers should monitor how the blending of physical real estate operations with AI, robotics, and autonomous systems progresses, particularly as firms like Fifth Wall continue to back these full-stack innovators. The success of such companies could redefine the traditional proptech category and influence how capital is allocated in the real estate tech ecosystem.
Tracking investments in horizontal software solutions that serve multiple industries but offer unique advantages for real estate will also be key. These platforms could become foundational tools across property management, development, and brokerage, ultimately shaping new standards for how real estate technology products are adopted and commercialized.