The average construction site hasn’t changed much in the last twenty years. Looking closely behind the fencing, you’ll see many people doing labor-intensive tasks. They are assisted and supported by standard equipment like excavators, bulldozers, and concrete mixers.
A passer-by may conclude that this industry is unaffected by disruptions in the innovation economy. The building is just a building—one brick on top of the other.
Analysts compile lists of sectors that are generating VC cash. These days, it is likely to be dominated by deep-tech and biotech, as well as fintech and other variations on the distributed ledger theme. The rankings rarely include construction tech.
Foundamental is a Berlin-based investor who specializes in the construction industry.
Adam Zobler, General Partner, acknowledges that this industry is slow to change – at least in reputation. He recalls how he looked across many sectors to find investment opportunities. He says, “When my partner suggested building, I laughed.” “But as we started to strip away the layers of the union, we began seeing investment opportunities.
Many of these chances were created by the very real industry challenges. These included the need to address the net-zero agenda and cut waste. According to Zobler and his associates, this industry required new solutions. Investors were needed to invest in those who provide the innovation.
Understanding the Pain Points
Fundamental was founded in 2018 and raised funds in 2019. According to Zobler, the limited partners consist mainly of large corporations that deeply understand the industry. Zobler says, “We come from a traditional VC background. We were generalists.” “We had to get to know the industry and its deep-tissue pains.” Foundamental has made 61 investments totaling over 50 million euros.
Foundamental’s goal was to identify investment opportunities that could do more than just provide efficiency improvements or better ways of doing business. Finding startups that could make a real difference and shake up the construction industry was essential.
Zobler says that the industry has been slow to adopt. “It has been stubborn and tends to say no, we do things this way.”
What Does it Look Like
What does “construction technology” actually look like? The Foundational portfolio offers a wide variety of solutions. Mighty Buildings, for instance, is a company that uses 3D-printed components to build affordable homes. SafeAI Retrofits site machinery using autonomous technology to increase productivity and safety. Software solutions, such as granet’s software spend management tools for small and medium-sized construction businesses, are also available. Infra. Market, an Indian company, is the Amazon of the construction sector. It uses technology to help companies procure materials more efficiently.
Are we poised to witness a similar revolution in construction as in other industries? Although it may take a while, Zobler claims that other VCs have begun to show more interest in the sector. He also argues that founders are becoming more attracted to construction.
The industry is not the only thing that needs to change. It must change to meet future challenges. Technology provides the tools to increase efficiency, reduce labor shortages, and reduce pollution.
