How proptech founders can negotiate like real estate funds

Tech is rewriting commercial real estate exponentially. Most coverage is news - who raised what, who bought what. This newsletter covers physics. Structural forces. Patterns before they’re obvious. Atoms and bits. Subscribe for updates →

the physics

We think real estate firms and proptech companies play completely different games. They don’t.

Both are aiming to build high-valuation assets. For proptech founders, it’s the startup itself. For investment fund managers, it’s the property portfolio. Prologis trades at 15-30x Revenue/EV. Equinix at 10-15x. CoStar, the data platform - 10-20x. That’s the game.

Yes, the environments are different. The conditions are different. But the core game? Building value through recurring revenue and asset appreciation.

I’ve been thinking about how this similarity can change how deals get negotiated. In CRE, “the deal” always has its agenda, and asset valuation sits at the top. That’s why rent frees exist. That’s how the business gets done. Monthly rates stay untouched because they drive valuation. The flexibility happens elsewhere.

Recognize you’re playing the same game, and suddenly the rules make way more sense.

the signal

Our case from a few months ago: negotiation stuck over a small monthly gap. The client wanted a lower rate. We held firm - we’re treating monthly recurring revenue as a direct proxy for enterprise value. Every euro of MRR lost isn’t just revenue - it’s 100x that number in valuation evaporated.

So our team designed a “rent free” deal. Keep the headline MRR on the books. For the annual deal, give the client 50% off for the first two months. Preserve the valuation while giving flexibility.

The bonus? Keeping the high perceived value of your product. If you offer €15,000 software with a 35% discount, you can be absolutely sure your clients will see 9k, not 15k. Give them 3 months for free, and thank me later.

the translation

For proptech founders: most of us negotiate like pure SaaS companies. “Subscribe for 12 months, get a 10% discount.”

Stop. Take the lesson from CRE players. No discounts on recurring revenue.

Instead, think in terms of rent frees. It’s the exact playbook CRE uses with tenant incentives. Lock in the rate. Create flexibility elsewhere. First month free does the same thing for your client, but keeps your valuation intact.

For CRE executives buying proptech: most founders don’t naturally lean toward flexibility as they operate on the SaaS default — straight discounts on monthly rates because that’s what everyone does in software.

This is actually where proptech can learn from real estate when it comes to making “the deals.” CRE has spent decades figuring out how to give clients flexibility while protecting the metrics that drive asset value. Rent-frees, tenant improvements, staggered payment structures — the toolkit exists. And it’s built for the exact same game proptech companies are playing.