6 Noteworthy Construction Technology Investments Insights
The following insights into the latest investments in the construction technologies paint a promising picture of the construction and built environment industry worldwide.
1. Investment has doubled in the past decade.
Last year, construction technology companies had garnered $10 billion in investment between 2011 and early 2017. Research has pointed not only to a greater volume of outside investment but also an acceleration in investment.
Between 2008 and 2012, construction technology received $9 billion in cumulative investment. Between 2013 and February 2018, that number doubled to $18 billion, largely driven by mergers and acquisitions.
2. Early technologies are delivering on their promise
Research reveals that by the number of transactions, early-stage venture capital (VC) is on the rise. Of the 908 transactions from 2013 through February 2018, three in four were early-stage VC.
Indeed, since 2015— a peak year for VC investments—the construction technology space has sustained a relatively high level of investment from VCs, suggesting that more solutions will be ready for scaling and that high levels of merger and acquisition (M&A) activity will continue unabated.
Such a steady rise indicates that certain use cases are market-backed and ready for growth financing, delivering on the promised impact.
3. Construction phase remains the highest invested phase of the asset lifecycle.
The construction phase leads the ecosystem in garnering the most overall capital from 2013 to February 2018, with both the highest number of use cases and the highest number of transactions. It is also relatively mature; only one-third of companies in this phase are newcomers.
4. Preconstruction and construction back-office phases are both garnering large investments.
Investment in the preconstruction phase is primarily driven by labour and equipment marketplaces, a relatively fragmented solution space where regionally focused players will eventually face consolidation. Construction back-office, on the other hand, is a very mature solution space. Investment in this phase is driven primarily by mature companies through M&A or private equity transactions with high average values.
5. Cross-cutting technologies are gaining the most momentum.
Researchers classified 3D printing, virtual learning, design simulation, machine learning, and deep learning as “overarching,” given their applicability across different stages of the life cycle.
While they found relatively few transactions in this category compared with construction and commissioning, the number of companies founded in this space over the past five years exceeds any other category, and the dollar value of transactions is quickly catching up with the rest of the categories. The average transaction amount is particularly high in capital-intensive use cases in this category such as 3-D printing.
6. There are two untapped markets: design/engineering and concept/feasibility.
It may be because entrepreneurs have focused on life cycle stages that hold most of the project value. Alternatively, the office-based nature of these phases also means their relevant solutions (such as CAD or BIM) may already be relatively mature and sophisticated.
Researchers foresee less disruption in these stages and more continuous improvement (for example, new features for existing software).