Last year, funding in construction tech startups broke records. And that year may stand alone.
Funding in US-based construction tech startups totals just $192.5 million across 40 deals halfway through 2019. Of course, there are caveats: reported data often undercounts seed and early stage rounds. Furthermore, it takes just a couple of big rounds (like Katerra’s $865 million Series D last year) to skew those numbers pretty significantly. Still, $192.5 million across 40 deals is still significantly lower than the $1.274 billion raised by US-based construction startups in the first half of 2018.
So, what could be behind the apparent slowdown? Some investors who have invested in the space have some thoughts.
Greylock Partners’s Jerry Chen believes that what may be happening is that “while there are a ton of construction tech companies being started, the number of companies that can attract a lot of capital is small in number.”
Zach Aarons, partner and co-founder of MetaProp (which invested in Avvir), remains bullish on the space.
“From our perspective, the market is hot. All of the deals are super competitive and we are scratching and clawing to win allocations,” he told Crunchbase News via email.
And deals are being announced regularly, even if they are on the smaller end.
Over the past week, Rhumbix, a San Francisco-based startup with a mobile platform designed for the construction craft workforce that we’ve covered in the past, announced the closure of a $14.3 million Series B led by Blackhorn Ventures and Tenfore Holdings. And Avvir, a New York-based automated construction platform for monitoring and building digitization, announced a $2.5 million seed round led by Khosla Ventures partner Evan Moore with participation from MetaProp and LocalGlobe.
Rhumbix CEO Zach Scheel said via email that the company, which was launched by two U.S. Navy veterans in 2014, is using the new capital to hire across all departments including sales, engineering, product, and field operations. Rhumbix, he added, has seen year-over-year revenue growth “in excess of 3x the past few years.” According to Scheel, the company is seeing major demand for its “enterprise-grade field tools for tradesmen and women that not only digitize paper and Excel-based workflows, but do so in a way that generates structured data that can be fed into BI tools, project management platforms, ERPs, and other back office software platforms.”
Greylock Partners, S28 Capital, South Park Ventures, and Glynn Capital also participated in the Rhumbix financing, which brought the company’s total raised to $42.9 million.
Meanwhile, Avvir says it is using its capital infusion to continue building a “system of reality” for buildings, or “a system of record that connects building plans to built reality and syncs them automatically,” eliminating the need for manual data entry. The goal of its system is to cut down on “rework.”
The Avvir platform uses computer vision algorithms to compare laser scans and photographs captured onsite to a building information model (BIM) and then automatically update it, “effectively creating a digital twin of the site,” according to the company. This digital twin can be used for construction monitoring purposes during the construction project and as a platform for building management once construction is complete.