- The pandemic has hit the construction tech space hard, leading to layoffs at SoftBank-backed Katerra and a pause on ProCore’s plans for an IPO.
- But those short-term challenges may lead to long-term gains, with $265 billion in annual profits up for grabs according to McKinsey.
- Spending on construction technology has actually increased by 50% since the pandemic began by of the companies that McKinsey surveyed.
- The construction industry, which is notoriously old-school, is embracing technology that could lower costs and make sites more efficient with the application of things like machine learning, robotics, 3D-imaging, and drones.
- We polled construction tech experts, VCs, and analysts to create a list of 10 of the hottest contech startups to watch.
- Read more BI Prime stories here.
Before the coronavirus hit, leading VCs like Bain’s Merritt Hummer were predicting that 2020 would be a banner year for construction tech companies. Proptech funding was booming and housing prices looked set to continue rising through the 2020s, partly as a result of flatlined productivity in construction.
Then, the pandemic happened. With a tightening economy and construction halting around much of the country, the sector was hit hard, like many other venture-backed sectors.
The two construction tech unicorns both saw challenges in the pandemic. SoftBank-backed Katerra, which has raised $1.2 billion in funding, laid off roughly 220 people in April, just months after closing a factory in Phoenix. Procore, a construction management software startup that has raised $304 million, halted its plans for an IPO after filing in February, according to a Bloomberg report.
However, short-term challenges may lead to long-term rewards. A recent McKinsey study found that a $265 billion pool of annual profits is up for grabs as construction becomes more digital.
The shift to digital technology was already underway, but the coronavirus accelerated it, with half of the 100 construction executives surveyed by McKinsey saying they’ve increased their tech investments since the pandemic began.
Construction technology startups apply new technologies like machine learning, robotics, 3D-imaging, and drones with the aim to make building cheaper, easier, and safer.
We polled a list of construction tech experts, VCs, and analysts to create a list of ten of the hottest construction tech startups (in no particular order).
[Editors note: this list was originally published in January 2020]