INSUBCONTINENT EXCLUSIVE:
Mary Ann Azevedo
Contributor
Share on Twitter
Mary Ann Azevedo covers startups and tech at
More posts by this contributor
Austin in January: Cash rich and maturing
Although it not the sexiest of industries, the
hefty construction sector in 2018 attracted not only the attention but, more importantly, the dollars of investors.
Historically,
themulti-trillion-dollarsector has been slow to adopt new technologies, as builders rely on a variety of disparate systems to manage
projects, traditional building methods to construct homes and non-smart materials.
But a wave of startups is looking to capitalize on
opportunities within the sector
Companies that have developed software solutions aimed at streamlining processes and increasing efficiencies are increasingly common
Prefab construction has evolved thanks to innovation in that space, and 3D printing technology cancreate homesin a matter of days.
Investors
Funding in United States -based construction technology startups surged by 324 percent, to nearly $3.1 billion in 2018 compared with $731
million in 2017, according to Crunchbase data
While the 2018 numbers are impressive, it important to note that a few large rounds did take place last year and thus skewed the results
One startup alone, Menlo Park-basedKaterra, brought in $865 million fromSoftBank Vision Fund,RiverPark Ventures andFour Score Capitalin a
Series D round last January
And, smart glass companyViewclosed a$1.1 billion Series Hin November
Also,Procore, a (unicorn) provider of cloud-based construction management applications, in December raiseda $75 million Series H round
fromTiger Global Management.
Without those two rounds, the construction tech sector saw just $1.135 billion in funding in 2018, up a more
modest 55 percent over 2017 totals.
The industry continues to see MA activity
Larger software companies are recognizing that it makes more sense to acquire companies in this space rather than try to reinvent the wheel
For example, in the fourth quarter of last year, 3D design software providerAutodeskannounced plans toacquiretwo cloud-based software
startups in the space:PlanGridfor $875 million andBuildingConnectedfor $275 million
Publicly traded software developerTrimblein Julyacquiredconstruction management software startupViewpointfor $1.2 billion.
Jerry Chen,
partner atGreylock Partners, is bullish on the sector and expects 2019 will only see more funding and acquisitions
His firm invested in San Francisco-basedRhumbix, which has raised $28.6 million to grow its mobile platform designed for the construction
That company, he says, had a &record year& in terms of customers and users.
2018 was an inflection point for the construction tech
industry,& Chen told Crunchbase News
&Major venture investing and strategic MA by incumbent players continued… and I think you will see other major enterprise software
companies begin to invest more in construction in 2019.
One construction tech startup founder,Nick Carterof Chicago-basedIngeniousIO,
believes that despite the big numbers, the industry has a ways to go in terms of true startup growth
Part of that is simply due to one thing: tech founders and some investors are intimidated by the space.
A lot of people don''t understand
&There a massive learning curve
Companies have been building buildings the same way for hundreds of years and not everyone understand its complexities.
The fact that
construction is a largely unregulated industry is also a factor, Carter believes.
Eventually money will flow into the sector because of the
pure size of the market,& he told Crunchbase News
There are VCs at every angle wanting to get into this space, but they&re looking for the right opportunities
There just aren''t a ton of startups in the space.
Construction is also avery cyclical business,and one has to wonder if a potential
economic downturn would give investors pause
But to Carter, a downturn would only create more need for products like the one his company is working to build
IngeniousIO platform uses artificial intelligence to redefine the process of construction projects by creating what Carter describes as &a
unifying, data-driven approach.
Tighter budgets are where a company like ours can do very well,& he said
&Companies wouldn''t have the overhead of outdated apps that take a significant amount of support to manage, scale and implement.
The
construction sector may not have the cache of other more Twitter-friendly markets, but it does have the sheer size and potential to provide
ripe soil for investors willing to break ground on new opportunities.
