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Big Capital Bets Big On Construction Technology

Venture capitalists are buying into new construction technologies in a big way, investing more than ​$1B in global construction technology startups in the first half of 2018 — a record high, according to JLL data. 


The investment volume of 2018 is already up nearly 30% over the total investment for all of 2017, JLL says in its State of Construction Technology report.

"This traction goes to prove ConTech’s budding allure to users and investors alike, with investment growth actually outpacing overall tech startup investment growth in the United States," the report says.

Underpinning the movement of capital into the development of new construction tech is the relatively low-tech state of the industry. JLL notes that construction is one of the "least digitized sectors in the world," with only agriculture and hunting behind it.

"In today's world, software, technology and computing power are not universally adopted in construction, but these startups are working to change that," the report says.

Moreover, there are strong economic forces pushing construction toward higher-tech capabilities and more efficient construction processes. 

For one thing, nearly every industry in the U.S. has nearly doubled its productivity in the past 25 years, according to the Bureau of Labor Statistics. Construction has actually declined by that metric. Much of the difference is because construction is a slow-adopting industry when it comes to tech.

Also, material and labor costs are both rising rapidly in the construction sector. Labor in particular is getting more expensive, and is in short supply in a lot of markets. Labor-saving technologies would thus be a relief to labor pressure on the industry.

According to JLL, ConTech will deliver on the promise of more efficiency and lower costs for construction projects via one of three primary types of tech startups.

One is collaboration software, which can speed up the paper-passing process during a construction project. A sizable number of construction tech startups are focused on optimizing workflow, the report says. 

Two, startups are focused on fabricating building components in a manufacturing setting — where efficiencies can be much more precisely controlled — then shipping the pieces to the final building location for rapid assembly. Someday, such fabricating might be done via 3D printing.

Finally, nearly every aspect of a construction site can collect data using the Internet of Things and other smart tech. Startups that leverage big data and artificial intelligence are aiming to use these massive data sets as tools to make more informed decisions on a construction site, JLL says.