Dive Brief:
- Three-year-old prefab construction startup ManufactOn just got a vote of confidence from the construction investment industry with its $2.5 million Series A financing round led by Brick and Mortar Ventures, Engineering.com reported.
- Autodesk’s Forge Fund and WND Ventures also participated in the round. Their support draws attention to the trend of contractors looking to offsite to accelerate timelines and improve quality control.
- ManufactOn provides software that helps contractors using prefab manage their subcontractor networks and the related supply chain, including the delivery of raw materials to the factory and of the eventual finished components to the site.
Dive Insight:
The investment community is growing its stake in construction software, with industry-specific investors like Brick and Mortar, in particular, willing to put money on the idea that some of the latest digital tools can address construction’s well-known productivity gap.
While global manufacturing productivity has increased 3.6% in the last two decades, that of the construction industry rose just 1% during the period, according to a McKinsey report released earlier this year. Closing that gap, the report found, could add $1.6 trillion to the industry — if construction companies and software service providers can find a solution.
Earlier research from the consulting firm calls out disorganized decision-making and procurement, miscommunication among team members as to a project’s status, and a lack of real-time updates as some barriers to productivity gains.
Several companies have surfaced with software-based solutions to those concerns. PlanGrid, for one, digitizes building documents so teams can have access to the same version of plans and share updates from the field. And Procore developed an operating system for construction companies to store digital product information in one place.
Some of those startups are being scooped up by larger companies. FieldLens, which offers contractors a mobile and web-based project management platform, was recently acquired by coworking company WeWork. While Caterpillar bought YardClub, an equipment sharing and management technology company it had previously invested in, earlier this year.
The $2.5 million given to ManufactOn is small change compared to the money being poured into these and other later-stage construction technology startups. In April, offsite construction startup Katerra raised $130 million in Series C funding, pushing it to a $1 billion valuation and indicating continued interest in prefab. Procore hit a $1 billion valuation late last year following a $50 million funding round. And PlanGrid has raised more than $50 million from investors since its seed funding round in 2012.
