Katerra — Building a Bright Future
by Sam Fort, DFJ Partner, and Ryan Morgan, DFJ Associate
In a recently released report from McKinsey, Reinventing Construction: A Route to Higher Productivity, the consulting firm highlights the startling statistic that the multi-trillion dollar global construction industry has the ignominious distinction of being at the very bottom of all major industries in terms of digitization and productivity gains over the past century. Despite representing ~13% of worldwide GDP, global construction productivity growth has only averaged 1% for the past 20 years. In the US, while many sectors of the economy including agriculture and manufacturing have increased productivity ten to 15 times since the 1950s, the productivity of construction remains stuck at the same level as 80 years ago!
At DFJ, we are constantly on the lookout for disruptive approaches to large, legacy markets that are ripe for transformative innovation — think Tesla in automotive, SpaceX in launch vehicles, and Formlabs in manufacturing.
Surely there must similarly be a company that can bring innovation, a software-driven mindset, and some Silicon Valley hustle to a market as massive as construction?
Enter Katerra. DFJ is thrilled to partner with the company as part of its $130 million Series C financing announced today, and support its mission of reinventing the construction industry.
Katerra aims to take construction out of the stone ages by leveraging technology, modularized design, and end-to-end vertical integration to move from individual project thinking to a systems-based approach.
Katerra is a full-service partner for real estate developers and combines technology, design, material sourcing, manufacturing, logistics, and construction into a single integrated offering. This results in a dramatically simpler alternative to traditional processes and an ability to deliver projects faster with superior quality, less waste, and significantly lower costs than ever before.
Since its founding two years ago, Katerra is already achieving remarkable customer and business momentum. The company has assembled a stellar team of more than 550 people, built a fully-operational manufacturing facility in Phoenix with many more to come, and generated more than $500 million in bookings in 2016. The company is currently working on a variety of projects in California, Oregon, Washington, and Nevada across its service portfolio from architecture and engineering to construction management and renovation services.
Driving Katerra’s success is its management team that uniquely combines technology, construction, and manufacturing experience.
Katerra’s Co-Founder and CEO, Michael Marks, has decades of experience growing companies and realizing operational efficiencies as the former CEO and chairman of Flextronics and a co-founder of Riverwood Capital. Katerra’s other co-founder, Fritz Wolff, has over 20 years of experience as a real estate investor and is currently the chairman of The Wolff Company, one of America’s largest real estate developers.
DFJ is incredibly excited for Katerra’s next stage of growth. We look forward to seeing big things to come.