White Paper: The Intersection of Construction Tech and FinTech

Authors: Diana Tian, Justin Crist Lee, Daniel Fetner, Ryan Freedman

An Untapped Opportunity

As a team, we have been propelled to spend more time understanding the construction technology space. Construction makes up 13% of worldwide GDP. There is over $10T in annual spending. And the sector employs 7.5% of the global workforce. It goes without saying that construction is a business behemoth. It is also one of the most antiquated industries in the world. However, the degree of technology investment in the space is meaningfully under-indexed. So far, only ~$5–6B has been invested in construction tech — and half of that value went to two companies alone.

There is a clear supply-demand mismatch in terms of capital deployed to the space and the opportunity based on the sheer size of the industry.

Meanwhile, we have seen an evolution in the FinTech space. What we’ve seen emerge across industries are verticalized solutions: anytime there is value exchanged in an industry, there is an opportunity for financial technology to streamline inefficiencies and provide value to all stakeholders in the ecosystem. With construction specifically, we have not seen many FinTech solutions purpose-built for the construction industry. Instead, we have seen established FinTech companies try and cross-sell into the construction industry.

From our experience in the industry, we have learned that construction is a unique category with its own unique demographic. To date, the biggest hurdle for the construction tech ecosystem has been adoption. Therefore, we strongly feel that:

(1) products sold into the construction industry need to be purpose-built for the specific use case, and that,

(2) founding teams should come from the industry and possess category expertise.

With this Founder-Market-Fit philosophy in mind, we want to explore two questions here:

(1) What opportunities exist for FinTech in construction,

(2) How should FinTech companies drive adoption?

We will also share a deep dive into three sub-categories within FinTech:

(1) Payments

(2) Lending Products

(3) InsurTech, formulating our insights and predictions on the future of Construction FinTech.

FinTech’s Opportunity in Construction

When thinking about FinTech’s potential, we need to reiterate a legacy problem within the construction industry: construction spending is growing, but productivity growth remains low. According to McKinsey, productivity in manufacturing has nearly doubled since the early 90s, whereas in construction it has remained flat.

Meanwhile, the labor shortage problem is driving construction spending up. According to the 2020 outlook survey conducted by the Associated General Contractors of America (AGC), 81% of the firms that plan to add workers reported and continued to expect difficulty hiring. Among those that face staffing challenges, 41% had to pass the higher costs through their bids and contracts. Material cost is also rising and has remained unpredictable. Based on data from the AGC, net prices for materials and supplies sold to the construction industry increased at a 12.8% CAGR between 2016 and 2019.

To mitigate this inefficiency between inputs (labor and materials) and outputs (productivity), stakeholders in construction employ a multi-layered process that involves an army of third parties including lawyers, insurers, architects, and environmentalists, each contributing its own expertise via intricate documentation (i.e., contracting languages) and specialized products (i.e., subcontractor default insurance). However, the byproduct is a complex ecosystem that burdens the level of productivity even further.

If we look at the flow of capital as a representation of inputs and outputs, then financial management is a way to streamline this inefficiency and break this vicious cycle. FinTech, if adopted effectively, can serve as a means to transform the second-least digitized sector in the U.S.

Today, there are three key financial services, Payments, Lending Products, and Insurance, in which value is estimated and exchanged in construction. Each possesses a significant market size and plays a critical role. Each also experiences considerable pain points, illuminating an acute demand for innovation.

Construction Payments is a multi-billion dollar industry. According to Rabbet’s Construction Payments Report 2018, it takes 54 days on average for a contractor to receive a payment. ~83% of contractors have filed a lien due to slow payments. Carrying forward fees and costs of slow payments resulted in a ~$40BN economic impact in the construction industry.

Insurance is an expensive source of cost for businesses in the construction industry, construction-related insurance premiums are expected to rise >5% in 2020. Poor workmanship and defective products account for 36% of global insurance claims.

Lending is a crucial lifeline in construction. According to S&P Market Intelligence, U.S. construction loans reached a post-crisis high of $354BN in Q1 2019, but the total still only reached 50% of pre-crisis high, representing more potential in continuous growth. Liquidity is a constant constraint for businesses, as 46% of contractors tap a credit line to create liquidity, and 3.3% of total project costs are finance expenses from floating capital.

FinTech’s Adoption in Construction

In thinking about FinTech adoption, we should not think of it as a standalone industry, but instead as a verticalized solution: a component of the Construction Tech stack in which value is exchanged. In this wave of innovation, we predict to see verticalized solutions that unlock embedded FinTech products in construction. As an analogy, Toast, a point-of-sale FinTech solution, is software tailor-made for the restaurant industry. Embedded FinTech solutions, like Toast, are especially needed for industries with a great deal of complexity that may not be served well by generalized horizontal products. Construction FinTech solutions are perfectly positioned to take the form of verticalized integration because of the financial services already embedded in the construction ecosystem.

For these solutions to take hold, (1) access to high-quality, proprietary, and curated-labeled data and (2) technological integration into the construction workflow are essential. To gain data and achieve integration, new FinTech companies must embed themselves into the financial ecosystem of construction businesses; hence, the Founder-Market-Fit is our beacon to excellence.

How Startups Can Thrive and Identify their Unique Wedges in the Construction Landscape?

To put the Founder-Market-Fit into practice, we identified three wedges — (1) Value-Chain Constituents, (2) Project Lifecycle, and (3) Industry Organization — that a FinTech entrepreneur should analyze when crafting their competitive advantages in delivering solutions purpose-built for the construction industry dynamics and driving adoption from incumbent players without needing to involve all parties simultaneously.

First, entrepreneurs should understand the conflict of interest among the inputs (labor and suppliers), the contracts (Subs and GCs), the owners (developers and equity investors), and the lenders. All of them prefer an on-time completion, yet each conflict of interest represents a foreseeable risk that prohibits them from achieving the shared interest.

For example, contractors prefer to be paid as tasks are completed based on milestones, whereas lenders approve a monthly draw based on an estimated percentage (%) of completion. This constant negotiation creates risk in labor shortage and liquidity issues and therefore increases the likelihood of delays. Similarly, workers look for a safe working environment. Contractors’ concern about personal liability claims outside of the worker’s compensation claims in case of job-related injuries. Owners and lenders are more worried about long-term construction defects lawsuits that can happen 10 years down the road.

Next, entrepreneurs should also understand the objectives and strategies that these constituents use to manage financial liabilities during each phase of a construction lifecycle. Each conflict of interest represents a potential risk that constituents need to actively avoid, transfer and mitigate during one or several phase(s). For example, contractors need to avoid completion delays during the construction phase. Owners need to consider macroeconomic and local real estate market risks during the operation or disposition of an asset. Risks embedded in early stages, such as the planning and permitting risk in the pre-development phase, can spill into later stages and trickle down the entire workstream.

Any existing solutions, such as GMP or cost-plus contracts, consultant reports, or monthly draw processes, only reshuffle the underlying liabilities among different parties, none of which can really mitigate multiple risks for several parties at the same time. Since the flow of capital is a manifestation of risks and liabilities, a successful Construction FinTech product needs to be a Multilateral Risk Management Platform that mitigates risks for multiple parties at the same time.

Lastly, entrepreneurs should examine the stakeholder relationships engendered from two industry organizations — self-performing vs. subcontracting. Interestingly, the payment software for a single-family residential project needs to be more similar to an oil & gas project than to a mixed-use project. What dictates the software features is the type of contracting work. For multifamily or commercial projects, the tasks are highly subcontracted, whereas, for an oil & gas facility, the engineering and procurement are all self-performed.

Risk tolerance, desired profitability, schedule and timelines, access to labor and resources, and quality of work are all factors that stakeholders consider when deciding between self-performing or subcontracting. The way that they organize work will determine a unique set of contracts, payment flows, and approval requirements. Industry organization (subcontracting vs. self-performing) will create nuances that FinTech companies need to consider when designing a product that will help the would-be customers better manage their risk during different phases of a project lifecycle.

Our Four-Step Framework of FinTech Innovation

By analyzing the development and evolution of startups in the space, we have identified a clear path for FinTech innovation in the construction space:

• Digitize processes
• Collect data
• Predict insights and risk analytics
• Develop and expand FinTech product offerings

Startups must first digitize a process by reimagining an outdated component of a business workflow. New firms should enter the space by improving a cumbersome part of the business and then develop sticky relationships with their customers by delivering immediate value. Second, startups collect and curate proprietary data across the ecosystem by leveraging the digitized experience. By taking advantage of their position in the workflow, they can create more value for their customers.

Next, firms deliver this value as they predict insights and analytics for their customers. This additional value is delivered through the use of data collected throughout the customer relationship. Finally, successful firms continue to develop and expand their product to offer additional FinTech services. This can take a number of forms, such as offering novel financial instruments or expanding within the value chain to become a more integrated and valuable end-to-end player.

It’s helpful to understand this pathway by looking at examples. One paradigmatic case study we found in our work is Foresight, an emerging insurance platform in construction. Foresight started out as a mobile app for compliance that was launched for its end-users (i.e., construction workers) to engage with safety and accident reporting. The company then used this mobile experience as a means to collect data along key risk metrics, and further productized the data by developing risk-scoring algorithms. These algorithms are used to rate the risk of different construction sites, and will soon be used as part of an underwriting initiative. Foresight is now planning to offer competitively priced workers’ compensation plans to its customers. This FinTech expansion is powered by the differentiated data and insights from end-users that the firm was able to collect along its development path.

The Future Ahead

Applications of FinTech solutions to the construction space will create an explosion of new possibilities for the industry. We can imagine a world where industry inputs (e.g., inventory, labor) are better tracked, managed, and utilized so that industry outputs (e.g., projects, investments, profitability) are more controllable and optimized.

For instance, these technologies will allow inventory to be tracked and measured at every touchpoint. When new supplies arrive on site, this information is sent throughout the ecosystem: workers will know which materials go to which tasks, contracts will be automatically updated, quality will be measured and tracked, and construction models and project financial projections will be automatically calibrated. From here, construction site workforces will be more efficiently allocated to project jobs, and these jobs will be completed with more visibility, and fewer accidents and errors. As workers build out the site, a wealth of data about project completion, compliance, and potential hazards will be available to all parties. Developers and lenders will be able to know the precise status of work in flight, and workers will be safer and more productive.

Ultimately, more projects will run on time, remain on budget, and be completed profitably. Financial technology has the power to address the core challenges of more productively and efficiently converting inputs into industry outputs.

However, when we analyzed each of the three FinTech subsectors (payments, lending, and insurance), we found them to be at different points in their evolution. Insurance is the furthest along in its path of FinTech innovation, and we believe this reflects the role of incumbent insurance players, who are frequently willing to partner with risktech startups. Payments and lending, on the other hand, are more entrenched in the construction industry. These subsectors face additional challenges associated with complexities throughout the construction industry value chain as previously outlined. We explore each of these three subsectors in more detail below.

Opportunity Area: Payments

The overarching problem in construction payment flow is that it focuses on the chain of approvals rather than the flow of payments. Builders submit monthly draw requests with hundreds of pages of invoices, emails, and documents, demonstrating the completion of several discrete milestones. Lenders approve and remit payments monthly based on a percentage (%) of estimated completion.

Owners verify the completed milestones against a predetermined set of drawings and schedules and then negotiate with contractors on the actual amount to be sent. We label this current state as “retrospective verification”, mostly executed by humans comparing each document, negotiating at every stage, and sending paper checks from lenders to owners to builders and finally to workers/suppliers.

FinTech companies have begun to digitize parts of the paper trails and collect the data needed to approve each step along the approval chain. For example, LevelSet offers an entire suite of software to verify the submission of lien waivers, digitizing the final step of a lender’s approval for a draw request. TracFlo thrives to streamline change orders, whereas Vertical plans to drive adoption via title companies.

These three pain points all have a high acuity. They impact every stakeholder but do not involve every stakeholder. Employing simple technologies, such as electronic communication or cloud documentation, construction FinTech software can deliver tangible utility and drive quick adoptions.

More excitingly, some startups now employ more advanced technologies, such as computer vision, to enhance each stakeholder’s decision-making capacity with improved risk predictions, thus marching one step further along our four-step innovation framework. By offering a living BIM, Avvir enhances lenders’ and owners’ oversight to precisely match each milestone completed against the drawings in real-time.

We believe that this type of “Real-time Verification” can unlock parts of the approval chain and enable the flow of electronic payments. These payments still need to be periodical, but “Real-time Verification” could noticeably reduce the required time and effort. Nevertheless, the overall process will still revolve around the approval of draws rather than the flow of payments.

Until we can unlock every valve along the approval chain simultaneously, we still cannot live in a world where invoices are exchanged electronically and verified automatically, productivity and progress are tracked precisely and continuously, and payments are remitted directly from the source to the receiver.

To coin a phrase, we aspire to foster this form of “Automatic Verification and Direct Remittance.” In this ideal world, once a worker completes a task, the payment is transferred instantly and directly from the lender’s bank to the worker’s digital wallet. To color this white space, Construction FinTech software would need:

(1) curated, proprietary data and productivity monitoring to enhance risk management and,

(2) technologies, such as point of sales, to process a bulk of transactions momentarily and accurately.

End-to-End Platform for Automatic Verification + Direct Remittance

With the aspiration of “Automatic Verification + Direct Remittance”, we analyzed 80+ Construction FinTech companies, overlaying them with their target constituents and categorizing them based on their target phases of a project lifecycle. This overarching, layered map illuminates that (1) most of the existing Construction FinTech companies can only serve a portion of the approval chain and that (2) we are still in the infancy of end-to-end platforms that infiltrate the entire ecosystem from lenders to owners to builders to workers and suppliers.

For example, eDraw currently serves the draw management, which is more of a step to computerize the draw submission process. Without services, such as tracking reserves or remitting actual payments, it lacks the capability to offer insights overlooking the complexity and nuances of the entire project.

Nevertheless, we believe FinTech software solutions in Project management and Financial management have the best potential to emerge into the end-to-end platforms, but they would need an integration of more specialized products, such as bidding management, progress monitoring & BIM, etc.

Market Map: Payments

Examining each category of Payments companies from the lens of our four-step framework, we observed that most of the Project, Payment, Bidding, and Draw Management companies have made progress in digitizing the process and collecting the data necessary to automate the flow of payments.

As these early-stage companies consolidate, grow more specialized products, such as Avvir’s living BIM software, and partner with financial management platforms, we predict that there will be an eventual emergence of end-to-end platforms that automatically verify and directly remit payments, especially those with contracted values, such as a lump-sum payment to architects, or those that do not need to be withheld for punch list final completion.

Opportunity Area: Lending Products

To distinguish from the loan management software that Financial Management companies offer, we define Lending Products as the capital markets products to finance construction activities so that we can build more, cheaper, and faster. We separated Lending Products into two categories:

(1) construction financing on development projects and,

(2) corporate financing on construction businesses.

We believe our four-step framework of innovation is also applicable to purposely build these capital markets solutions for the construction industry.

For construction financing on development projects, the existing products include construction loans from banks and private debt funds, impact-oriented capital from nonprofits and family offices, and public financing programs from government entities. Construction financing is often strictly negotiated between owners and lenders during the pre-development phase, but the resulting terms can impact every constituent throughout the project lifecycle.

Lenders often face many challenges that cloud their risk management effort and limit them from adopting more informed and efficient lending decisions. These challenges include:

(1) lending decisions made in a less data-driven approach,

(2) low visibility into progress and productivity,

(3) necessary information siloed throughout the organizations, and,

(4) multifaceted channels of communication needed to be managed simultaneously.

Market Map: Lending Products

Through our bottom-up research, we separated companies that offer loan management tools into two generations based on their potential of innovating Lending Products. We identified a group of first-generation loan management companies, such as ISGN, ECL Software, and BankLabs. They focus more on converting the paper trails into an electronic format, but less on collecting data or inferring risk predictions. There, we believe that the second generation of Financial Management platforms, such as Land Gorilla, Rabbet, and Built Technology, are superbly positioned to innovate.

Lending is really the all-encompassing, ultimate extension of construction project management, financial management, progress monitoring & BIM, and any other specialized products that we identified in the previous section, such as lien waivers, change orders, or draw requests. It is their intersection that can enhance risk analytics for lenders and innovate lending products in ways that we have not seen.

We have observed this type of industry development through Built’s acquisition of Lien Waiver, which facilitates the exchange of lien waivers, ACH payments, W9s, and 1099s. Through the acquisition, Built could offer more detailed visibility into (1) a project’s progress at each task’s level and (2) a payment remittance at each supplier’s level. Collectively, the platform could offer lenders more insightful risk predictions on multiple projects across their entire portfolio, empowering them to take on risks that they would not have been able to previously.

We believe this sort of platform development will continue amongst the second generation financial management companies through either organic product innovations or acquisitions so that they can enhance their capability of offering more well-rounded risk analytics.

With that said, we predict two paths of evolution for these companies. One, these startups can evolve to offer more cost-saving lending products, such as more competitive interest rates or cheaper exit terms. Alternatively, these startups can sell their data and analytics to incumbent lenders, such as banks or credit funds, to enhance the incumbents’ lending practices. Either strategy presents a pathway along our four-step framework for these startups to improve development projects’ access to capital markets.

For business financing on construction companies, we observed that the existing SME lending companies, such as Ondeck and BlueVine, have begun to serve construction clients via their existing product offerings, such as line of credits, invoice factoring, and small business loans. However, because of the nuances in the construction industry and the lack of high-quality data, we think that these SME lending companies may not be well-equipped to deploy purposely built Construction FinTech products.

A better way to serve construction clients is to identify value-add services by analyzing the conflict of interests among stakeholders, lifecycle, and industrial organization, and then to enhance risk management via the data collected from these value-add services. A perfect example is Handle, which offers value-add services in construction payments. It then creates corporate financing products based on the data it collects from its payment services. Without those data, handle.com would not be equipped to offer construction-tailored products, such as trade credit for materials, sell mechanics liens, etc.

We also believe that construction payment management companies can evolve to offer more tailored business financing products. An example could be LevelSet. By offering subcontractors the ability to rate general contractors, LevelSet obtains a stream of previously unavailable information that helps evaluate the general contractors’ creditworthiness. From there, LevelSet will be equipped to offer better terms for its lending products.

Opportunity Area: InsurTech

Insurtech is a large and growing FinTech subsector. 2019 was a banner year for Insurtech investment, with approximately $6.8B in financing volume in the sector across ~250 transactions. Additionally, strategic involvement in financing activity has continued to increase, with 48% of all financing rounds in 2019 including participation from a strategic investor.

Broadly, the power of Insurtech is threefold:

(1) driving efficiencies for legacy processes,

(2) delivering improved underwriting and modeling, and,

(3) reducing claims for insurers.

There are meaningful applications of this to the construction space. Insurtech can help mitigate risk related to worker injury, limit costly damage to construction sites, and provide more accurate and current site data for improved underwriting and better pricing. We believe applications of Insurtech to the construction industry will help drive down insurance premiums, which rose precipitously in 2019. Additionally, these technologies can help improve site safety and lower overall risk for individuals as well as project and investment managers.

Within the construction Insurtech space, there are three key categories of firms. Site monitoring and worker productivity startups are leveraging new technologies like drones, wearables, and computer vision to get a better picture of construction sites and potential risks. Intelligent risktech solutions have developed predictive insights as an additional source of value. They utilize the data they collect to help predict and prevent future risk events. Finally, emerging insurance platforms are beginning to expand from reporting and monitoring offering additional FinTech services. This includes risk management tools like vendor compliance and even becoming an origination channel for insurance products.

Our analysis of this emerging space, as well as insights from Insurtech startups in other industries, confirm a set of core hypotheses for us. First, there continues to be considerable value in digitizing outdated tools and processes. As outlined in our FinTech evolution framework, this is a wedge for many companies to develop relationships with customers in the space. Second, partnering with incumbents can enhance the value delivered to customers, as a cooperative relationship with insurers often yields data access and sharing. Finally, business models can be built by either selling collected data back to insurers or by offering insurance products directly through the platform.

We are excited about the possible ways in which Insurtech will transform construction. We are eager to see the rise of end-to-end insurance platforms purpose-built for the construction industry. These innovations have the power to materially reduce worker death and injury. Furthermore, the adoption of Insurtech solutions will create a competitive advantage for construction firms that make this strategic investment. Net-net, we anticipate applications of Insurtech to create a safer and more profitable construction industry.

Market Map: InsurTech

Closing Thoughts

We are excited about the future evolution of this space and what the future has in store for us. At a high level, we see two key areas of large opportunities: process optimization and data utilization. In terms of process optimization, FinTech possesses the significant potential to streamline the inefficiencies throughout the construction value chain. In terms of data utilization, we see tremendous value in continuing to leverage the data collected throughout the construction value chain as a source for product innovation and further monetization.

Process Optimization

Many of the startups at the intersection of construction technology and FinTech have been focused on reimagining old processes by building more streamlined and automated ways of doing business. While these effects have been felt throughout the industry, there is still a large blue ocean opportunity in payments. Automatic Verification + Direct Remittance is the aspired world in the evolution of construction technology. Currently, payment processes are slow and archaic. While innovations have meaningfully improved payment management, we still have a long way to realize the ideal world where funds are transferred automatically, immediately, and directly among value chain constituents. Given the complexities of building last-mile automated payment solutions, we anticipate end-to-end payment platforms leveraging user scale and data aggregation to make this possible in the future.

Data Utilization

In years past, data monetization was frequently touted as a viable business strategy for many now-defunct FInTech startups. While this serves as a warning for many entrepreneurs, we believe there is material untapped potential in further monetizing data in the construction technology space. Specifically, many of the new digital companies in the industry are collecting critical data that can deliver serious value to financial services partners. With payments and lending, we see an opportunity for players to sell metadata back to lenders and investors for improved underwriting and decisioning.

With insurance, there is a similar opportunity to productize construction projects and site data for insurers. Successfully utilizing these sources of data will require close partnership with existing institutions — which should feel second nature to many construction tech startups that have entered the space with a bias towards partnership over all-out disruption.

Finally, companies should think about the abundance of data they are collecting from the ecosystem to develop new and improved financial products and ways to sell them. In contrast to monetization by selling data to financial providers, companies can use the data they have on their customers to tailor customized products and offers from financial services providers directly to their clients. For instance, site risk monitoring platforms have unparalleled access to their customers and an enviable understanding of their individual risk profiles. The next generation of Construction FinTech is up for grabs, and those that can use what they know about their customers to deliver superior tailored financial products will win.

About the Authors

Diana is a dual-degree MBA / MPP candidate at The Wharton School and the Harvard Kennedy School. Diana aspires to revolutionize mature industries by investing in technologies that foster inclusive growth. This summer, she interns with Sidewalk Labs, an Alphabet company, to build out their first Urban Innovation Fund investing in the adoption of software and technologies alongside the underlying real estate assets. Prior to HKS, Diana was a private equity associate at the CIM Group in Los Angeles, where she worked on both development and acquisition of mixed-use assets in the United States. Diana started her career as an investment banking analyst in Deutsche Bank’s Leveraged Finance Group, focusing on LBOs and M&A financings of Technology and Industrial companies.

Justin Crist Lee is a second-year at Harvard Business School. Prior to business school, he worked at Capital One, first in corporate strategy and then in new product development. As the business lead for the consumer bank’s research and development team, Justin helped drive a product agenda for innovation at the forefront of FinTech. After school, he plans to further advance a career at the intersection of entrepreneurship and financial technology.

Daniel Fetner is an expert and thought leader at the intersection of Real Estate & Technology. As a Principal at Alpaca, Daniel is focused exclusively on investing in the Real Estate & Construction Technology sector. Daniel is responsible for sourcing and leading deals, adding value to portfolio companies, and engaging with the fund’s Real Estate-focused Limited Partners. Daniel’s background spans traditional Real Estate Finance as well as Technology, Venture & Entrepreneurship. Daniel graduated with an MBA from the University of Pennsylvania’s Wharton School of Business and a BBA from the University of Michigan’s Ross School of Business.

Ryan Freedman is a founder & General Partner of Alpaca. Prior to launching Alpaca, Ryan founded Corigin, a private real estate investment firm that specializes in owning, operating, and developing residential properties. Naturally curious with a penchant for creative problem-solving, Ryan has been at the forefront of analyzing and adopting real estate technology to enhance operations and investment decisions. Ryan earned a Bachelor of Business Administration from the University of Wisconsin — Madison in Real Estate and Urban Land Economics. He is an active member of the leadership of the Young Presidents’ Organization and former Chapter Chair of YPO Metro NY.

About Alpaca.VC

For those not familiar with Alpaca (fka Corigin Ventures), we are a NY-based Seed Stage Venture Capital firm leading seed companies reshaping the real world. We invest in the people, products, and processes that power commerce in the physical and digital world. We believe when you layer technology over daily life, it transforms how the world works.

Real Estate Technology has always been a core competency for us and we are extremely bullish on the future of Construction Technology. Prior investments in the construction technology space include Trade Hounds, which is building LinkedIn for construction, and Toolbx, an on-demand materials marketplace for contractors, renovators, and project managers.

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