Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 869

"Cities have become the basic platforms for global innovation and economic growth, supplanting the corporation as the fundamental organizing unit of the contemporary economy." -Richard Florida

Richard Florida and Patrick Adler of the Martin Prosperity Institute here in Toronto have been doing some research on what they are calling "urban tech." They define it as encompassing the following industry sectors: co-living and co-working; mobility; delivery; smart cities; construction tech; and real estate tech.

Here are the largest urban tech startups based on the amount of VC investment they have received:

Below is how the space breaks down by sector. Mobility / ride hailing is the behemoth, receiving 61% of all VC investment. Food delivery is next. And "proptech" is at the bottom.

Finally, here are the top "urban tech" cities. Beijing is right up there with San Francisco.

For more information on the study, click here .

Tables: CityLab

Earlier this week, Union Square Ventures announced that it was leading a Series A investment in an online education marketplace targeted at K-12 students. The platform is called Outschool , and you can think of it as a form of homeschooling.

Today, there about 55 million K-12 students in the US , with around 9% enrolled in private schools. Charter schooling is on the rise (somewhere around 3 million students), but so is homeschooling (similarly around 2.5 million students). Data here .

Homeschooling, at least in the US, largely started within religious groups. But that is starting to change and it is becoming more widely adopted. USV has made a bet that this trend will continue.

If you look at Outschool's model, you'll see that it shares a lot of similarities with other successful internet marketplaces. It is direct-to-consumer (the internet has a way of getting rid of intermediaries). The courses are significantly cheaper than traditional classroom schooling ($10-15 per course). And the supply-side of the marketplace (the teachers) is far more open and accessible to non-traditional participants.

USV gives the example of a human rights lawyer who is teaching on the platform and now earning more than $10,000 per month in additional income. I've never enjoyed online classes, but now that we have reliable video chat, maybe that starts to change.

In any event, where my mind goes with all of this is the impact on our built environment. We are heading toward more flexible spaces and we are doing a lot more from home.

Today was the 2019 Land & Development Conference here in Toronto. I was on a panel in the morning about Proptech. I then sat in on a discussion about construction costs. But after that I had to get back to the office to prepare for a couple of meetings.

Here are my tweet takeaways (from the back of the room) during the construction cost session. You may need to click through to see the full thread.

https://twitter.com/donnelly_b/status/1133758132767907840

The construction cost escalations that we have seen over the last 2-3 years have had a significant impact on new construction in this region. Niall Finnegan's view is that we are 85% of the way through this "storm."

From his experience, it takes 18 months or so for hard costs to respond to changes in demand. And so the storm we are currently in is a result of elevated condo sales from 2017-2018.

The general consensus from the panel was that costs should start to moderate sometime soon, though maybe not this year. Nobody really knows when that will happen. But if/when hard costs do adjust, it typically happens quickly.

One comment that didn't make it into my tweets, but that I found interesting, was about how uncertainty and volatility in the market -- like what we are seeing today with construction costs -- could actually stifle innovation.

Because it creates additional project risks, it limits people's appetite for other kinds of risks -- like trying new things. I can see that.