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Dive brief:
- The seemingly unstoppable growth in construction technology funding stalled last year as total investment in the space fell to $3 billion in 2023 from $5.4 billion in 2022a decrease of 44%, according to year Cemex Ventures annual report. The total number of trades rose to 236, however, slightly more than the previous year’s total of 228.
- The venture capital arm of Madrid-based Cemex said investors were more conservative due to macroeconomic factors such as high interest rates, geopolitical conflicts, inflation and upcoming elections.
- Although cash has become scarcer, contech has continued to make up a larger part of the global venture capital ecosystem, the report said. In 2020, contech accounted for 0.60% of total venture capital investment, rising to 1.06% in 2023.
Diving knowledge:
Cemex broke down the 2023 contech funding totals into four categories:
- Green construction: Processes, products and services that offset the negative environmental impacts of construction raised $1.06 billion by 2023.
- Improved productivity: Digital solutions aimed at increasing efficiency through data-driven technical solutions brought in $701 million last year.
- Future of construction: Programs such as AI, robotics, and machine-assisted applications in industrialized construction such as 3D printing robots, BIM, and autonomous equipment raised $690 million by 2023.
- Construction supply chain: Offerings that help contractors secure materials, such as technologies that track materials and fleets, manage builders’ inventories, and materials marketplaces earned $584 million last year.
Almost half of the cash (49.5%) came in seed rounds, which are usually the hallmark of early-stage startups. Series A funding rounds, which go to more mature companies, accounted for 23.3% of funding. The number of seed rounds also increased from 91 in 2022 to 117 in 2023.
Location was also an important factor. The US saw 44% of all technology deals, followed by Canada with 11% and the UK with 10%.
The US, Cemex Ventures wrote, will remain a strong part of the investment ecosystem in 2024, while some locations, such as Latin America, will remain the same as last year. Europe will have slightly less activity than the US, but will lead investments related to green building and sustainability.
Cemex Ventures expects the industry to stabilize in the first half of 2024 after the drop in investment from 2023, according to the report, and reiterated that there is still widespread demand for innovation in technology and construction.
“The decline in technology investment last year should not be mistaken as a sign that investors are cooling off and looking elsewhere,” the report said. “In fact, the increase in the number of transactions from 2022 to 2023 shows that investors still have their eyes on contech, especially on clean technologies and technologies that promote the digitalization of construction.”
