Katerra snaps up $865M in Series D funding

Dive Brief:

Turnkey modular builder Katerra took home $865 million in a Series D funding round led by the SoftBank Vision Fund, the company reported Wednesday.
The round, according to Katerra, will help finance the company's expanding manufacturing operations and back its R&D.
The announcement comes just three weeks after reports from Axios suggested Katerra was readying for a $200 million funding round.

Dive Insight:

Katerra has made huge strides with investors during its three-year lifespan. Since its founding in 2015, the company has snagged more than $1.3 billion in project inquiries for new construction and surpassed $2.5 billion in valuation. This latest round marks the company's largest single-funding round since April when it took home $130 million.

And this likely won't be the last mega-round for Katerra or other increasingly successful construction technology-focused companies. Katerra took up a whopping 15.5% share of the top 20 construction technology deals made from 2012 to mid-2017, and investors — as of October — had already put in roughly $433 million in disclosed funding to the sector during 2017.

Part of the uptick in con-tech investment can be attributed to a rise in the number of companies occupying the space. For Katerra's part, the trend is also tied to growing U.S. interest in offsite construction. The method is gaining steam as the industry's well-documented productivity gap has run up against increased demand for new residential and nonresidential developments.

Offsite's main draw is its ability to protract project timelines and help lower costs, at least for the 93% of AEC professionals who have reported using the method since 2014. And while those benefits are compelling, a growing roster of influential adopters is also piquing industry interest.

"With companies like Google, Marriott, Starbucks and other high-tech firms like Autodesk embracing offsite, there is a ton of investment money looking to revolutionize the construction industry," Tom Hardiman, executive director of the Modular Building Institute told Construction Dive in October.

Marriott, especially, has strengthened its foothold in the sector. The company already had six offsite manufacturers as of October, and has plans to increase that number to 13 this year. According to Marriott, its uptake of the method has been driven primarily by a desire to reduce building costs and help ease difficulties in finding skilled labor. Though it has yet to put a timeline on the endeavor, Marriott is developing a metric of goals to measure offsite projects' strengths and weaknesses against its site-built counterparts.