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(01:03) Primer: What is the Scope of AECS-Tech

(02:16) AECS-Tech beyond $34B in VC Funding

(03:04) Quarterly Growth Remains since 2021

(04:13) AECS-Tech now at 0.53% of total VC (2x)

(05:24) Funding round sizes near All-Time Highs

(07:15) Healthy Distribution: Top 10 Deals = 34%

(08:35) No Change in Unicorns Last Quarter

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Q2 is in the books. My colleague Gabriele Tinelli and I used the past two weeks to give you the most comprehensive Q2/2024 funding stats for AECS technology.

I found them compelling. We will dive deeper into what these numbers mean for Constru-Tech, Supply Chains and AEC.

Primer: What is the scope of AECS-Tech

First off, as always, making sure we're all on the same page when we say AECS technology. In principle, these are the sectors that transform the real-world through projects:

1. Core construction tech (ConTech, the C part): This is the bread and butter of the industry.

2. Renovation tech: eg. renovation solutions such as retrofit insulation technology.

3. Planning and design (the AE part): eg. computer-aided engineering, engineering services, or even interior design.

4. Supply chain solutions addressing our sectors: eg. B2B marketplaces, payment solutions dedicated to construction.

Against this definition, let's dive into the Q2-2024 numbers for the AECS-technology market.

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AEC- and S-Tech beyond $34B in VC funding

We have crossed a major threshold - AECS-Tech has pulled in over $34 billion in total cumulative VC funding. This figure includes both the narrow definition (core ConTech) and the wider scope I just outlined.

This is substantial growth, compared to the $30B we had stood at in Q4-2023.

So it is not chump change anymore, and puts our sector further and further on the map of big capital allocators.

What I find most impressive is how we got here. While many sectors saw a huge spike in 2021 followed by a plateau, AECS-Tech (incl. Constru-Tech) has shown consistent growth. It's not a mirage anymore; it's a sustained trend that continues to go counter-cyclical to the wider venture/VC market.

Quarterly growth remains high since 2021

Speaking of trends, let's look at the quarterly numbers. Before 2021, we were seeing about $2.5-3 billion on a rolling four-quarter basis. Now? We're consistently hitting above $3 billion. That's a significant raise in the floor post the crazy outlier year of 2021.

And here's the kicker - if we included the 2022 numbers (which I eliminated from the quarterly view as it was a big down-year all over venture), the contrast would be even more stark. We're not just seeing higher peaks; we're seeing higher averages across the board.

Funding round sizes near all-time highs

Let's break down the funding rounds behind these VC numbers. Seed rounds in AECS incl. Constru-Tech are now almost three times larger than they were a decade ago. While we see that general trend all over venture, it is actually even higher in our sectors than in general view. See chart below. This indicates the catch-up in funding.

Series A and B rounds are more or less steady at about 150% of their 2014 sizes, though they expectedly peaked in 2021.

And here's where it gets interesting, and unexpected: The growth stage rounds in AECS-Tech are showing more resilience compared to the overall VC landscape. This I did not expect to find. While other sectors took a big nosedive after the 2021 peak, we're trending upwards.

Partly because we are growing from a small baseline. We have been an underinvested sector for years, and now we are seeing a macro catch-up. The proverbial rising tide.

AECS-Tech now at 0.53% of total VC (2x growth)

An indicator I keep watching closely is the market share of our sector. AECS-Tech's slice of the global VC pie has doubled. We are now capturing a median of 0.53% of total VC investment, in one quarter recently we even hit 1%.

While pre-2021, we were struggling to hit 0.4% and were at a median of 0.28%. Meaning: We doubled in market share.

This shift isn't just randomly more money due to a few outlier fundraisings. This capturing of more and more share of the VC market is a big deal and validation of top-down capital allocation, which usually creates a flywheel of capital >> founder quality >> industry adoption >> capital. Big allocators are starting to see the potential in our sector. And we can see that also in the ...

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Healthy concentration-ratios: Top 10 deals = 34%

Here is another stat that caught my eye: The top 10 deals accounted for only 34% of the quarter's funding. In an under-developed sector, you'd typically see one or two mega-deals making up 50% or more of the funding.

This distribution tells us we are having a constant flow of relevant companies attracting capital. It's not just about a few unicorns anymore; We are seeing broad-based growth across the sector.

Looking at the top 10, we are seeing a mix of models across decarbonization tech, robotics, marketplaces, and SaaS companies. It's a diverse group, which is another indicator for the growing health and relevance of the ecosystem.

No change in Unicorns last quarter; several slotted for IPO

On the Unicorn front, things were stable for now. We've got a mix of established players and a few that haven't raised in years. It'll be interesting to see how this evolves in the next 12-24 months.

Among the established ones we do count several profitable of the Indian Constru-Tech category creators, most notably Infra.Market (an early investment of ours) and ZETWERK (my partner Shub led their seed round in 2018). InfraMarket has recently announced their intention to go public in 2025, and with strong numbers and net-profitability, this could become a banger listing unlocking more liquidity for the AECS sector down the line.

We did see one Unicorn, Veev, unfortunately go into liquidation. But overall, the Unicorn count remains steady. As the sector matures, I expect we'll see more movement here, both in terms of new Unicorns emerging and possibly some consolidation.

Where we are going

The numbers tell the truth. I am reading them as AECS-Tech maintaining momentum, and picking up steam steadily. If you're building in this space, now is the time to capitalize on the growing investor interest. The pie is getting bigger, and there's room for innovative solutions across the board. Our expectation is that we will reach $50 billion of total funding in 2026, putting us right on track with the universal funding pattern we have discovered. So keep your ears to the ground.

Q3 update coming: Mid-October.

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Data Source: Tracxn