This week:
Several fundamental shifts for founders and venture investors in the construction markets
Why solving for a shortage transformers, cables and power infrastructure is a billion-dollar opportunity in AEC
The state of Constru-Tech VC funding per Q4-2023
How Constru-Tech outperforms the total venture market since 2021 by 3x, and why constru-Tech hubs grow faster outside USA
Sneak peek at upcoming analysis of the 17 Constru-Tech Unicorns across the globe
Construction Tech Funding Reaching New Highs
Massive growth in construction tech funding is happening, with the sector now at $30 billion and 4 times more important to overall venture capital compared to before 2021. Construction tech is also growing faster than the broader venture capital market, with 160% more funding after 2021 versus before. The accelerating growth in this sector continues to stand out. As Patric Hellermann says, "Construction tech for the first time in history has crossed $30 billion in VC funding."
Global Unicorns Emerging
17 unicorns in construction tech already exist globally, with 10 of those located outside of the United States. This highlights the global diversification that is playing out in the construction tech sector, countering the perception that most of the innovation is happening in the US. Significant hubs are emerging across Europe and Asia. Shubhankar Bhattacharya notes how this global spread is "extremely counterintuitive to everyone in the probably most people or maybe even everyone out there in the ecosystem."
Major Fundamental Shifts Driving Opportunities
Several key fundamental shifts get discussed that present major opportunities in construction tech. These include ongoing workforce dynamics of shortages and surpluses in different markets, a worsening cash flow crunch especially affecting smaller firms, reorganization of global supply chains, and a massive need for energy infrastructure upgrades. As Patric Hellermann states, "If you're a serial founder and looking to find your next gig, I think Constructech offers a lot of very interesting fundamental shifts and tailwinds."
Overhauling Aging Power Grids Critical
A major opportunity exists to overhaul aging power grids globally using AI and generative design tools. Shortages get predicted in key components like power transformers as demand rises with factors like electric vehicle adoption and the renewable energy transition. Redesigning grids from their legacy designs proves critical to meet new energy needs. Shubhankar Bhattacharya notes "It's quite incredible" that even large utilities face 3-5 year waits for transformers and other components.
Construction Tech Bucks Downturn
Construction tech as a sector demonstrates resilience and counter-cyclical growth versus the overall declining venture funding environment. Its accelerated growth contrasts with the contraction across broader venture capital. Construction tech's insulating qualities and role in the real economy seemingly protect it from downturns affecting other tech sectors. As Patric Hellermann says, construction tech is "actually on an accelerating growth path" while "Total Venture is shrinking."
AI to Unlock Materials Productivity
Materials discovery powered by AI solutions will prove key for critical infrastructure upgrade and energy renovation projects. The ability to tap into massive materials databases and optimize selections will aid pressed projects dealing with supply chain constraints and sustainability requirements. AI looks set to unlock major productivity gains. Patric Hellermann believes "people are not necessarily giving it enough attention how fundamental of a shift that is."
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Keywords: construction tech venture capital funding growth trends unicorn startups global markets infrastructure materials ai workforce cash flow supply chain energy grid renewable transition components shortages