The construction industry continues to tackle the challenges of rising construction materials costs, a skilled labor shortage and overall lack of productivity improvements, offering an expansive opportunity for disruption. According to the newly released JLL research report, “The State of Construction Technology,” Silicon Valley investors are stepping in to seize that opportunity. Venture capital funds are funneling unprecedented levels of cash into Construction Technology startups’ pockets.
In the first half of 2018, venture capital firms invested $1.05 billion in global construction tech startups, setting a record high. The 2018 investment volume is already up nearly 30 percent over the 2017 total, with six months still remaining in the year. To date, the Construction Technology sector has found three Unicorns—startups valued at more than $1 billion—in Katerra, Procore and Uptake.
“The construction sector is on the verge of major disruption as tech start-ups tackle head-on the industry’s biggest pressure points,” says Todd Burns, President, Project and Development Services, JLL. “These startups can provide technology that helps deliver projects faster, cheaper and with fewer resources than ever before, effectively addressing the existing challenges in the industry.”
Emerging technology is opening a significant opportunity for venture capitalists and construction executives. JLL recognized this opportunity early, and last year brought on two Silicon Valley veterans to launch JLL Spark, a global business that identifies and delivers new technology-driven real estate service offerings, including a $100 million global venture fund.
JLL’s research uncovered three primary focus areas of construction tech startups:
1. Collaboration software. Considering that dozens of professionals can be working on a given construction project at the same time, leveraging cloud-based software to optimize the workflow could profoundly improve collaboration and impact the bottom line. Front-runners such as Procore Technologies, PlanGrid, Clarizen and Flux Factory are utilizing cloud capabilities, mobile platforms and dedicated design software to enable collaboration.
2. Offsite construction. As skilled construction labor becomes harder to find and general competition for construction inputs heats up, offsite construction startups are championing a different approach to how buildings are built: building component manufacturing. Offsite manufacturing and delivery of finalized components to the construction site equals shorter assembly time and more centralized production to help offset the labor pinch and rising costs. Industry leaders include Katerra, Blu Homes and Project Frog.
3. Big data and artificial intelligence (AI). From materials delivery to equipment maintenance, predictive data and automation tools can collect data on nearly every aspect of a construction project, resulting in data pools at risk of going to waste. Armed with big data and AI software, construction teams can make more informed business decisions to save time and money by extending the life of expensive equipment, reducing worksite risk and automating simple business processes. Top startups in this area include Uptake Technologies, Flux Factory and SmartEquip.
Since 2009, investors have closed 478 Construction Technology funding deals totaling $4.34 billion, underscoring the continued volume of construction projects and the recent urgency to innovate and offset industry costs. The huge bump in Construction Technology investment in 2018 is hopeful proof of an impending surge of technology and hardware marvels, promising to optimize the industry.
Related Stories
Sponsored | | Mar 17, 2015
Are face-to-face meetings still important?
One CEO looks pass convenience and advocates for old school, in-person meetings.
Resort Design | Mar 16, 2015
Giancarlo Zema Design Group unveils plans for semi-submerged resort in Qatar
The resort will have four semi-submerged hotels that look similar to super-yachts, each including 75 luxury suites with private terraces.
Mixed-Use | Mar 13, 2015
Dubai announces mega waterfront development Aladdin City
Planned on 4,000 acres in the Dubai Creek area, the towers will be covered in gold lattice and connected via air-conditioned bridges.
Contractors | Mar 13, 2015
Construction materials prices rise for first time in six months
The largest monthly gain in petroleum prices in over three years caused construction materials prices to expand 0.4% in February, ending a six-month streak when prices failed to rise, according to the Bureau of Labor Statistics.
High-rise Construction | Mar 12, 2015
Foster and Partners designs 'The One' in Toronto
Developer Sam Mizrahi worked with Foster and Partners and Core Architects to design Toronto's tallest skyscraper aside from the CN Tower, The One, which will house a luxury shopping mall and condos.
Contractors | Mar 12, 2015
Construction demand exploding in 2015, but costs complicate recovery
Raw materials and labor costs temper expectations for soaring profits.
Modular Building | Mar 10, 2015
Must see: 57-story modular skyscraper was completed in 19 days
After erecting the mega prefab tower in Changsha, China, modular builder BSB stated, “three floors in a day is China’s new normal.”
Sponsored | Metals | Mar 10, 2015
Metal Building Systems: A Rising Star in the Market
A new report by the Metal Building Manufacturer's Association explains the entity's efforts in refining and extending metal building systems as a construction choice.
Retail Centers | Mar 10, 2015
Retrofit projects give dying malls new purpose
Approximately one-third of the country’s 1,200 enclosed malls are dead or dying. The good news is that a sizable portion of that building stock is being repurposed.
Retail Centers | Mar 10, 2015
Orlando's Skyscraper to be world's tallest roller coaster
The Skyscraper is expected to begin construction later this year, and open in 2016. It will stand at 570 feet.
