Venture capitalists invested $1.05 billion in global construction technology (ConTech) in the first half of 2018. The investment volume of 2018 is already up nearly 30 percent over the 2017 total – and there’s still another six months left in the year. ConTech’s growth is enticing to users and investors alike, with investment growth actually outpacing overall tech startup investment growth in the United States.
In today’s world, software, technology and computing power are not universally adopted in construction, but startups are working to change that. It’s no mere accident that this uptick in ConTech investing coincide with an industry plagued by cost fluctuations, labor shortage issues and overall lack of productivity improvements – creating what many venture capitalists view as a prime opportunity for disruption. With construction schedules expanding and labor and materials costs rising, ConTech startups like Katerra and Uptake are the solution to these problems, promising to deliver projects faster, with fewer resources and cheaper than ever before. How? These startups are focusing on three big areas: collaboration software, offsite construction and big data and artificial intelligence.
In today’s construction environment, dozens of professionals can be working on a given construction project simultaneously – sharing documents, providing edits and making on-the-ground decisions. To combat version control and speed up the paper passing process, a sizeable chunk of ConTechs are focused on optimizing that workflow. Front-runners are utilizing cloud capabilities, mobile platforms and dedicated design software that allow for plants and markups to be shared instantaneously with all project stakeholders.
As skilled construction labor becomes harder to find, materials continue to rise in price, and general competition for construction inputs heats up – offsite construction startups are championing a different approach to how buildings are built. Offsite startups are focused on fabricating building components in a manufacturing setting, then shipping the pieces to the final building location for rapid assembly. Offsite construction can be leveraged for nearly every property type, and it utilizes intense supply chain optimization and just-in-time delivery to quickly and economically construct buildings.
Big data and artificial intelligence
Today – by way of the internet of things, beacon technology and smart software – nearly every aspect of a construction site and project can collect data. Startups that leverage big data and artificial intelligence are aiming to utilize these massive data sets as a tool to make more informed decisions on a construction site. Successful startups cover a range of solutions from optimizing materials deliveries and worker placement on site, to preemptively predicting equipment maintenance and automating simple business processes.
The pool of investors and venture capitalists in the construction technology field remains diverse. Both general tech and real estate specific investors are buying into the sector, but notorious startup accelerator Y Combinator has been the most active to date. While construction venture capital activity has quickly picked up in recent quarters, corporate investors remain notably absent from the active pool of investors.
Click here to learn more about ConTechs and what these startups are aiming to do.