In 2020, nearly $24 billion in venture capital poured into companies creating new technology products or innovative business models for the real estate market.
While things like smart home apps and digital mortgage financing services make life easier for upmarket renters and homeowners, none of these technologies help improve the day-to-day struggles of the vast majority of low-income families.
Many of these emergent technologies could be adapted to become “housing tech” solutions — focused on financial resilience, fresh food access, healthcare access and workforce development — which have the potential to transform the lives of our most at-risk populations.
Consider this: Nearly eight million Americans have slipped into poverty since May, according to a study released by Columbia University. Before the COVID-19 crisis hit, approximately half of all American households struggled to pay rent; a problem that is growing larger by the day as pandemic job losses continue to mount.
About 23.5 million people — half of whom are low income — live in food deserts where access to affordable, healthy food is limited or nonexistent. And good health care is almost impossible to access, let alone pay for, if you are poor.
As the global crisis continues to lay bare the deep inequities in our society, it’s clear that we need new ways of thinking to address these systemic issues. Investment in technology innovation in the affordable housing area could help solve these problems.
Local governments and nonprofits are doing what they can. In 2015, New York launched Urbantech NYC to uncover new technology solutions to urbanization problems faced by government, businesses and urban residents, tackling issues related to food, water, medicine, waste management and other problems.
In 2019, Enterprise Community Partners, a national nonprofit, partnered with MetaProp, a leading proptech venture capital firm, to invest in housing tech companies that are developing technology innovations to help families find an affordable place to live.
These efforts are commendable, but it is not enough. The housing tech movement needs more champions.
First, we need a more patient venture capital source, with a better understanding of underserved communities. Most venture capital firms fund what they know, and unfortunately few understand the affordable housing community, which is largely minority with female heads of household. But pay attention: There are lucrative opportunities here.
Affordable housing property managers tend to invest far more in social services for their tenant population than market rate property managers considering the coolest new piece of technology. You can make money while serving the public good.
Second, housing tech is in desperate need of an accelerator. The tech is out there, but most entrepreneurs don’t know how to “sell” to this specific customer base, which they must do if they want to create viable businesses that will attract venture capital. There are numerous existing technologies ready for an accelerator to take to the next level. These are a few of our favorites:
- Financial Resilience. Low-income people who live in affordable housing are often burdened with confiscatory payday loans and check-cashing services. Many don’t have banking relationships and pay rent in cash. The Lifesaver app helps households, especially those without banking relationships, navigate financial services and become more financially resilient. Earnin allows people to access their pay, with no fees, as soon as they work the hours without waiting for the payday to arrive. Research shows that people who take these short-term loans from nonpredatory lenders actually find themselves more financially stable in following months.
- Fresh Food Access. Cheetah, a wholesale grocery delivery app, has placed community fridges as fresh-food pantries. Via, a transit-on-demand provider, partnered with LA Metro and First 5 LA to subsidize food delivery during the pandemic, especially to women-led households with little children.
- Healthcare Access. Roundtrip provides booking for affordable nonemergency hailed rides, wheelchair vans and other specialized medical transports. Healthify offers a database of vetted and curated community resources, as well as information about the social determinants of health. Emerging software apps that facilitate telemedicine could also expand access to necessary health care.
- Workforce Development. Skilling America is a new workforce platform from Goodwill that improves placement, retention and promotion rates, and most people using the platform are doing so on their smartphones.
An accelerator could also connect housing tech to affordable housing owners and property managers looking for ways to magnify the impact of the social services available on site. The top 50 owners of affordable housing developments have the reach to connect tech developers with almost a million households.
These owners and property managers could act as leadership ambassadors of collaborative efforts among tech developers, venture capital investors and potential housing tech users.
We work every day with the inspiring stakeholders in the affordable housing community, as well as local governments and tech entrepreneurs looking to bridge this digital divide. This isn’t a pie- in-the-sky vision. The future is here and the call to action is now.
Originally published in Techcrunch: https://techcrunch.com/2021/01/27/vc-investment-in-proptech-can-yield-profits-and-change-lives/?guccounter=1
Co-author: D. Hara Perkins, Partner at Goulston & Storrs, PC.