Dive brief:
- The construction technology sector has exceeded $30 billion in cumulative venture funding since 2014, continuing its strong growth streak, according to an investment firm.
- Fundamental, a Berlin-based investor focused on the AEC industry that invests in companies around the world, published its data analysis of Tracxn, a platform that tracks startup statistics. The figures 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 past nine years, at least 17 companies have achieved unicorn status or reached valuations of more than $1 billion. Fundamental said others are likely to follow suit given the sector’s momentum in the face of the general decline in venture capital funding for all sectors.
Diving knowledge:
“Building tech really outperforms, as an asset class, the entire venture market,” Patric Hellermann, general partner at Foundamental, said in a video accompanying the firm’s blog post. “So it’s not driven by a blanket logic of ‘a rising tide lifts all boats.’ In fact, construction technology goes counter-cyclically where the total risk market is.”
The fundamental figures emphasize what he calls the “crazy VC year of 2021.” During that time, construction technology funding reached a new high of $8.7 billion, an annual sum the company hadn’t seen before or since.
Fundamental deduced that the six quarters after 2021 had 160% higher funding than the six quarters before 2021, according to the publication. Additionally, contech’s post-2021 quarterly peak is 280% higher than its pre-2021 quarterly peak.
The investment firm noted that these gains occurred against a backdrop of a shrinking venture capital environment. Global venture financing in the third quarter of 2023 reached $73 billion, up 15% from $86 billion in the third quarter of 2022, Crunchbase reported.
However, all is not well in the wider technology spectrum as established companies face technology adoption issues. AEC research and events consortium BuiltWorlds noted in a recent blog post that several well-known technology companies, including OpenSpace and Ingenious, recently suffered layoffs. He also posited that the adoption of technology in construction could reach a plateau.
However, these figures do not deny the overall strength of contech company financing.
“Despite a near-term slowdown in adoption, construction technology is very well positioned for the future, as one of the last frontiers of digitization in one of the healthiest engines of economic growth,” wrote BuiltWorlds.
