Dive Brief:

• Construction startups focused on enhancing productivity received the vast majority of the $4.5 billion that flowed into the space this year, according to a report on the top 50 contech startups in 2021 from CEMEX Ventures, the corporate venture capital arm of Mexico-based construction materials company CEMEX.
• Other strong categories in the contech environment include startups focused on green construction, the supply chain and tools reshaping the traditional construction process, according to the report. 
• Already reaching record levels of funding in 2021, the president of CEMEX Ventures expects that rate of funding into contech startups to continue in 2022.

Dive Insight:

Investments in contech in 2021 to date have tripled the amount invested in 2020. This record breaking year will end with not only a significant increase in investment, but also with the most funding rounds and acquisitions made within the contech ecosystem, according to the CEMEX report.

"Venture capital is starting to flow into construction technology more and more frequently," said Gonzalo Galindo, president of CEMEX Ventures. "Four or five years ago, contractors were not investing, they were testing concepts. Today, you can see contractors are really investing in venture capital as well. And that, as a result, has been a huge increase in the amount of money flowing into this."

But the construction industry lags behind other industries in technology adoption, Galindo said. Although technology use is rapidly increasing, Galindo said the construction industry remains very slow in adopting digitalization and still has "a long way to go compared to other industries."

That means ample opportunity for startups in the space, especially as more and more companies turn to technology to resolve construction-industry issues.

Startups geared toward enhancing productivity have received the majority of the money in terms of the number of transactions, said Galindo. The CEMEX top 50 list includes 13 startups focused in this area. 

AI Clearing, for example, is an American digital project progress reporting Saas platform that integrates several data sources to offer fully automated insights for infrastructure and energy. ProcurePro is an Australian-based digital procurement & subcontract management software for contractors that increases quality, efficiencies and profitability.

"In environmental issues, valuations are different and companies in carbon capture, for example, get valued very high, very quickly," said Galindo. 

For that reason, green construction technology ventures, therefore, might record fewer transactions, but are still bringing in large amounts of funding, said Galindo. The CEMEX top 50 list includes 14 startup companies in this area.

Two examples include Carbix, an American startup, which transforms atmospheric carbon dioxide into carbonates to build industrial products and Minolite, a Swiss-based startup, that transforms glass waste into sustainable construction materials.

"Environmental pressure will continue and will start increasing, especially on the building materials production side," said Galindo. "We will see much more efforts trying to reduce the carbon footprint and testing new technologies from carbon capture and research."

The vast majority of the contech revolution is happening in the United States and Europe, although some pockets in Asia are also increasing funding toward these technologies, said Galindo.