Revolutionizing Skilled Blue-Collar Construction Staffing
Why PropTech1 invested in Kollabo
By Konstantinos Matsoukas, Senior Associate PropTech1 Ventures
At PropTech1 Ventures, we have spent a lot of time evaluating the construction sector. Our three main conclusions from this sectoral analysis are:
1. Digital solutions must be designed for the construction industry and solve an indispensable problem. Proven concepts from other industries rarely work in the construction industry.
2. Retrofitting the building stock is the most important lever for achieving the German government’s climate targets for the real estate industry. Current methods and means are not sufficient to achieve this goal in a timely manner.
3. 320,000 additional skilled construction workers are needed in Germany alone for climate neutrality. To accomplish this mammoth task, a facilitator is needed who has access to all the construction professionals in Europe and can manage cross-border operations.
In 2020, PropTech1 invested in ecoworks (🔥🔥🔥), a company that uses prefabricated modular construction to mass renovate existing buildings, which is consistent with the first and second conclusions. Ever since, our team at PropTech1 has been searching for a best-in-class approach to address the inherent labor supply gap in the construction sector in line with the third conclusion. Today, we’re excited to introduce the solution in the form of Kollabo — an ecosystem for skilled blue-collar workers that leverages workflow software to nurture and empower skilled workers as differentiated individuals, helping build long-term relationships.
An overview of the European construction staffing industry
Europe has the highest turnover in temporary work of all continents, hiring more than 10 million workers each year and accounting for 44% of the global market (377 billion euros). In the construction industry alone, around 1.3 million skilled workers are contracted each year. Countries such as the Netherlands are recording double-digit annual growth rates in agency work sales revenues. This rapid growth is reflected in the doubling of demand for temporary workers on construction sites. 10 years ago, one in ten workers on a construction site was a temporary worker; today, two in ten are. Over the same period, the emigration of skilled workers from abroad rose from 8% to 21% in the construction sector in Germany. We interpret this trend toward transnational staff leasing as a clear market trend to fill local supply gaps. Yet, this process lacks modern infrastructure in the form of scalable software, payment and mobility solutions.
Building a successful HR marketplace has proven difficult in the past for many reasons. Nonetheless, HRtech startups have emerged in a variety of industries and markets, proving their disruptive potential. However, looking at the construction workforce, we strongly believe that an industry-specific and tailor-made solution is required. Let’s take a look at the nature of temporary staffing to show you why we believe a vertical marketplace will make all the difference for the construction industry.
Temporary work is characterized by multiple assignments per year with different employers in different locations, resulting in many redundant tasks: applications, travel, etc. Temporary employees are often selected according to specific requirements (e.g. work experience, assignment qualifications, availability). Therefore, reviewing up-to-date and accessible documentation of all relevant information about an employee is of utmost importance. Unfortunately, most temporary employment agencies are not known for transparency. The majority of placement agencies work offline and are employer-driven, which means that temporary workers rarely have insight into the job on offer and have little bargaining power when it comes to salary. Furthermore, temporary staffing agencies are known for opaque fee arrangements. This circumstance shifts the balance of power from the temporary worker to the placement agency. The only way for temporary workers to strengthen their bargaining position with intermediaries is to be represented by multiple agencies. With over 14k placement agencies in Germany alone, how does the temporary worker choose the right one? Before Kollabo, temporary workers first had to spot relevant agencies and identify, compare and apply for suitable jobs. A very manual and time-consuming process that is only carried out by very few contractors.
In summary, a solution is needed that puts the employee first, enables cross-national work assignments, and digitizes and automates redundant processes.
Founded in Switzerland in late 2018, Kollabo has built a platform that matches skilled construction workers with employers through temporary staffing agencies. In doing so, Kollabo works under the principles of a market network. Similar to Linkedin, which is aimed at white-collar workers, Kollabo supports blue-collar workers by creating unique profiles that help build long-term relationships, while at the same time creating a liquid marketplace that provides transactions among multiple employers and multiple employees. Kollabo enables frictionless transactions by building a digital ecosystem that efficiently connects all stakeholders. It’s a win-win situation. Before Kollabo, information silos led to high opacity in supply, demand, and quality, low transaction speed (time-to-hire), and extreme inefficiency, leaving a lot of money and time on the table. The Swiss startup enables its users to build a strong brand through a continuous rating system. It also provides workers with access to training opportunities to increase their demand. In the future, Kollabo’s offering will expand to include faster payment and housing, banking and insurance products. By offering an unprecedented package of services to workers, Kollabo creates a unique channel for talent acquisition.
From the first call, we were convinced by the founding team. Manuel, Andri and Cédric had gained very complementary experiences before having founding Kollabo: Manuel managed and sold a temporary employment agency for construction workers, Andri understands the importance of marketplace dynamics and Cedric is a mastermind in process optimization. In addition to their leadership and business skills, this trio is the perfect fit to revolutionize the skilled blue-collar construction staffing industry.
Kollabo will morph into an environment that empowers blue-collar workers to a level where frictionless transactions across borders become the norm. We’re excited to support this movement and to have found a team capable of bringing about the long-needed change in the construction staffing industry. We can’t wait to see the transformation take shape. As such, we are thrilled to announce that PropTech1 is leading Kollabo’s seed round. Welcome to the PT1 family, Manuel, Andri, Cedric and the entire Kollabo team!
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References:
(2) https://wecglobal.org/uploads/2020/02/Economic-Report-2020.pdf
(3) https://semiengineering.com/knowledge_centers/standards-laws/laws/dennards-law/
(4) https://www.bauindustrie.de/themen/news-detail/fachkraeftesituation-im-bauhauptgewerbe
