The New Architects: How Tech Companies and VCs Are Shaping Urban Centers

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Almost $150B of capital has been invested in urban technology over the last 8 years — from transportation tech to real estate platforms to smart cars and traffic management. As VC investment in the space grows, the future of urban centers is becoming more and more dependent on tech companies and their products, and less on governmental entities. In fact, a recent NewtonX survey with VCs who have invested more than $4M in urban technology over the past five years revealed that 72% see public sector city entities as regulators, not shapers. 

Public and private will become increasingly murky when it comes to the development of smart cities. In general, startups and tech giants are the ones building the technology that will shape our urban centers, but their motives are at odds with the public interest. To delve into this tension, the NewtonX survey with urban technology investors included sections on the relationship between urban tech companies and urban space regulators/ planners. The data and insights in this article are informed by this survey. 

For the Greater Good, or a Greater Bottom Line? 

The three biggest urban areas of investment are transportation, construction, and real-estate (the buying and selling of property, not creation of property). Tech companies have latched onto all three, and VCs have likewise invested billions upon billions. 

The most obvious of the three urban tech areas in which this is true is transportation. From Uber and Lyft to Bird and Lime, tech giants have been disrupting city transportation for years. Less well-known initiatives include parking and smart traffic management. While not as flashy, congestion and parking are huge problems in many major cities. In the US, there are four parking spaces for every car in existence, and many downtowns devote 50 to 60 percent of their sought-after real estate to vehicles. When it comes to traffic, the issue is even more pressing: The U.S. is the most congested country in the world, with drivers spending an average of 41 hours per year in traffic. Companies such as Microsoft, Alibaba, Amazon, Verizon, and numerous other smaller tech startups have all developed various products to improve traffic communication, data processing, and optimization. In fact, Google has even embarked on building an entire “Smart City” in Canada, where traffic signals will auto-calibrate to ease pedestrian and vehicle congestion during rush hour and public events. When it comes to parking, companies including Bipi ($9M in funding), Arrive ($61M in funding), and SpotHero ($67.6M in funding) have all developed unique solutions to parking problems. 

Transportation is only the tip of the iceberg for urban tech, though. From collaboration software to robotics, the construction industry in urban centers is likewise getting a tech makeover. For instance, PlanGrid, which has raised $66M, is a construction application that boasts real-time updates and seamless file syncing over Wi-Fi and cellular networks, thereby enabling owners and architects to collaborate easily from their mobile devices and desktops. VCs are also investing in on-site construction management technology. For instance, 3DR, which has raised $178.8M, makes drones that help with land mapping and site scanning. 

The last category, real estate, is similarly garnering massive investment. Opendoor, for instance, an online home-selling service, has raised $1.5 billion to streamline and expedite home selling. Bowery valuation, an appraisal writing software, has raised $18M. Meanwhile Airbnb is one of the largest (and most controversial, from the perspective of city regulators) startups in the world. 

These are just several of the hundreds upon hundreds of startups that are working to reimagine how urban processes develop and innovate. But as they grow and garner more and more power, many of them will find that ‘disrupting’ does not send the same message to cities as it does to investors. 

Tug of War: Who Will Win the Battle for Digitized Cities? 

The public and private sectors are increasingly crossing paths – be it in healthcare, transportation, or even waste management. This will inevitably raise concerns over motives, profits, and data protection — but will also result in faster digitization of legacy institutions. 

 

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About Author

Germain Chastel is the CEO and Founder of NewtonX.

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