Dive Brief:
- Despite recent reports detailing how investors on a worldwide scale are pouring money into construction technology firms, a new analysis from tech publication Crunchbase Daily shows that the flow of capital to U.S.-based firms may be slowing compared to last year's record numbers.
- At the halfway point of 2019, funding of U.S. construction tech startups totaled $196.5 million across 44 deals, Crunchbase reported, significantly lower than the $1.27 billion raised by U.S.-based construction startups in the first half of last year. This compares to the $4 billion in total investments for all firms as of the end of June that the Wall Street Journal reported earlier this month.
- Part of the discrepancy could be attributed to 2018 numbers being slightly elevated by a number of large funding rounds, the biggest of which was Katerra’s $865 million Series D in January of that year by Japanese conglomerate SoftBank.
Dive Insight:
Funding trends for U.S-based construction technology firms are indicative of the greater technology industry, which gets a great deal of financial support from outside the U.S. For example, Chinese funds are buying large stakes in U.S. venture-backed companies and Chinese tech giants have opened research centers in Silicon Valley, according to Bloomberg.
Foreign contech firms are part of this wave of technology investments. One such company, Dubai-based Tenderd, announced last month that it had raised a $5.8 million seed round from Y Combinator, Paul Graham, Peter Thiel, Beco Capital and others. Tenderd provides contractors in the UAE a platform that allows companies to supply and rent construction machinery and plans to expand to other nearby regions in the near future.
Nevertheless, market analysis from McKinsey and Co. finds that North America remains the dominant region for contech startups, followed by Australia and Europe, according to McKinsey partner Jose Luis Blanco. M&A deals like those from Procore and Autodesk have driven a large portion of the total investment dollars, he said.
The technologies gaining the most momentum in construction are artificial intelligence, digital twins (including the use of drones), robotics and 3D printing, Blanco told Construction Dive.
"It is important for the AEC industry to understand these and the other use cases that are gaining momentum and to prioritize investment in those technologies that will address their greatest challenges," he said. "The experience of other industries that have undergone similar levels of disruption shows that early movers will set the direction and reap both the short- and long-term benefits."
Whether 2019 will end on a positive note for U.S.-based construction technology firms remains to be seen, but many of them have benefited from investor interest in recent months. For instance, in late May, San Diego-based eSUB Construction Software, a field data collection and project management platform for trade contractors, completed a $12 million funding round that will be used to scale all areas of the company and accelerate product development, the firm said in a press release.
In addition, San Francisco-based Join received $4 million from investors last month, bringing its total funding to $5.2 million.
