Dive Brief:
- The construction technology sector has surpassed $30 billion in cumulative venture funding since 2014, continuing its streak of major growth, according to one investment firm.
- Foundamental, a Berlin-based investor focused on the AEC industry that invests in companies around the world, published its analysis of data from Tracxn, a platform that tracks startup statistics. The numbers exclude funding for failed modular builder Katerra, which had a meteoric rise followed by its sudden fall in 2021.
- In addition to the $30 billion in funding over the last nine years, at least 17 firms have achieved unicorn status, or reached valuations of over $1 billion. Foundamental said others are likely to follow suit given the sector’s momentum in the face of overall declines in venture capital funding for all sectors.
Dive Insight:
“Construction tech actually outperforms, as an asset class, the entire venture market,” said Patric Hellermann, general partner at Foundamental, in a video accompanying the firm’s blog post. “So it’s not driven by a general ‘rising tides lifts all boats’ logic. In fact, construction tech goes anti-cyclical to where the total venture market is.”
Foundamental’s numbers emphasize what it calls the “crazy VC year of 2021.” During that time, construction technology funding reached a new peak of $8.7 billion, an annual sum that the firm hasn’t seen before or since.
Foundamental deduced that the six quarters post-2021 had 160% higher funding than the six quarters before 2021, per the post. Additionally, contech’s post-2021 quarterly peak is 280% higher than its pre-2021 quarterly peak.
The investment firm noted that these gains occurred amid a backdrop of a shrinking venture capital environment. Global venture funding in the third quarter of 2023 hit $73 billion, down 15% from $86 billion in the third quarter of 2022, Crunchbase reported.
However, not all is well across the broader contech spectrum, as established companies grapple with tech adoption issues. AEC event and research consortium BuiltWorlds noted in a recent blog post that several established contech firms, including OpenSpace and Ingenious, recently underwent layoffs. It also posited that tech adoption in construction could be hitting a plateau.
However, these figures don’t negate contech venture funding’s overall strength.
“Despite a near-term adoption slowdown, construction tech is very well-positioned for the future, as one of the final frontiers of digitalization in one of the healthiest economic growth drivers,” BuiltWorlds wrote.
