Record year for construction and ConTech investment
Around the world, we have seen a sharp increase in the cost of construction materials due to a combination of the COVID-induced supply chain shakedown and ambitious infrastructure plans. Commentary on this issue has included the benefits of construction firms diversifying their supplier list; squeezed builder profit margins; shifts in the build-versus-buy dilemma; Biden’s $2 trillion USD infrastructure plan; and beyond.
When it comes to construction pipelines, many countries are making moves, but not all at the same pace. In the UK, for instance, the £11.13 billion (constant prices) of new building work approved in Q2 2021 was a 5-year record. On the other hand, Australia and Canada have experienced much more noticeable upswings over the past 12 months in their local currencies (see below).
When it comes to investment in the industry, Crunchbase data tells us something more interesting. Companies on their database with ‘construction’ or ‘ConTech’ in their organisation description are on track for a record year of both money raised and M&A activity. In fact, when it comes to money raised, 2021 had already become a record year by June. This shows the investment markets are well informed of the current and future tsunami of demand for construction.
Some notable examples of private funding include US 3D printing group ICON’s $207 million USD Series B in August; Israeli computer vision technology group Buildots’ $30 million USD Series B in August; UK cloud software firm Causeway Technologies’ £120 million GBP PE fundraise in June; as well as several earlier-stage Pi Labs portfolio companies such as QFlow, Contilio, and Propster.
A recent report published by Sifted gestured to the low margins in the construction industry as the catalyst for wider adoption of ConTech. With the aforementioned COVID-era stressors making matters worse for the construction industry, the question is how quickly ConTech solutions can be adopted to overcome them. For solution providers, this means making their value proposition both clear and tangible — not only knowing the industry’s usual pain points, but how they’re being uniquely shaped by the features of a partly-vaccinated world.
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