Last Week in ConTech - 03 June 2024
EU boost domestic clean manufacturing + Lendlease to exit international construction
Last Week in ConTech is a summary of the most important startup funding, news, policy changes and national project investments in the last 7 days. The goal is to provide decision makers with information on technology solutions and macro-economic trends in construction to help drive innovation in the industry.
In this issue there are:
13 Startup Fundings
9 Policy and Regulatory Changes
7 New National Infrastructure Projects & Priorities
0 New investment funds
1 Acquisition
7 News articles
Reading time: 16 mins
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Startup Funding
Decarbonization
Vizcab, a French startup, raised €4.5m in Series A funding with Brick & Mortar Ventures investing. They provide a SaaS platform which calculates the Life Cycle Assessment (LCA) to reduce the emissions of construction projects. More here.
Notes:
The EU recently passed the Energy Performance of Buildings Directive with the aim to decarbonize their building stock by 2050.
It will make LCAs mandatory for larger buildings exceeding 1,000 square meters by 2028 and then all buildings by 2030.
Supply Chain
Infra.Market, an Indian startup, raised $50m in funding. They offer a one stop shop for construction materials and products marketplace combining an asset-light procurement and distribution network with a curated supply chain of manufacturers. More here.
Notes:
Infra.Market has been called the Amazon of Construction Materials.
An early investor was Foundamental and they state Infra.Markets early thesis as:
India’s construction market is fueled by large projects.
There are a small number of large GCs servicing these projects whom we know how to sell to.
These GCs have thin margins but don’t have time to look for lower cost materials.
In India there are undiscovered suppliers who produce the same or better quality products than branded manufacturers with lower fixed costs and prices.
A digital-first one stop shop can be the platform to connect contractors and suppliers, if it is willing to guarantee delivery and quality of these small manufacturers products.
Related:
The Future of construction marketplaces - Foundamental
Infra.Market - The outlier writing a new playbook - Shubhankar Bhattacharya
Scheduling
SmartPM, an Atlanta startup, raised $5.5m in Series A funding led by Building Ventures and joined by GS Futures. They provide a schedule control software which applies AI and critical path method scheduling tools to help engineers understand the ‘the current situation’ and focus on ‘the next steps.’ More here.
[Hiring - 1 role in Sales, 1 role in Software, 1 role in Support]
Notes:
SmartPM’s founding story has many lessons for construction tech entrepreneurs.
The founder, Michael Pink, was a consultant to the industry and began to automate his work - the genesis of Smart PM.
By initially working as a consultant it allowed him to deeply understand the problem, build relationships with the client and iterate on the product using himself as a customer.
Additionally he was able to bootstrap the company and avoid raising venture funding until they were generating revenue.
This approach of operating a services business (consulting) to identify pain points to then build a product is one founders should consider. This is as the industry is more familiar with service / billable contracts vs product procurement.
From: Michael Pink of SmartPM Technologies: Five Things You Need To Create A Highly Successful Startup
Related:
Materials Testing
Wavelogix, an Indiana startup, raised $3m in funding. They have developed an IoT sensing and data analytics platform including concrete strength sensors which provide real time measurements of in place concrete strength which allows for data driven decision making on scheduling without requiring lab testing. More here.
Notes:
When concrete is poured on site we usually collect small test cylinders from the same batch and cure them in a lab to calculate the strength.
At regular intervals (1, 7, 14 and 28 days after pouring) the lab completes destructive testing to confirm the strength of the concrete placed.
This allows us to understand the strength development of the in-situ (on site) concrete. While accurate, there can be discrepancies between the lab and in-situ strength development due to differences in curing conditions.
For critical projects where concrete strength is crucial for proceeding to the next stage (e.g. opening a road to traffic), measuring the in-situ concrete strength directly can provide more immediate and accurate data than relying solely on lab-cured cylinder tests.
Offshore Wind Infrastructure
Clean Energy Terminals, a Californian startup, raised $50m in funding. They invest in and develop port infrastructure which is required to deploy offshore wind projects. More here.
Notes:
The US is targeting 110 GW of offshore wind capacity by 2050, including 15 GW of floating wind by 2035.
Their thesis is that similar to how roads and rail lines enable our land-based economy, wind ports are critical to building and operating offshore wind farms.
Investment and development is required in port infrastructure to support this.
Site Analysis & Progress Monitoring
TraceAir, a Seattle startup, raised $25m in Series B funding. They provide construction site analysis and management solutions for land development and home building which captures 3D project data helping teams save time and reduce errors and delays. More here.
[Hiring - 2 roles in Sales]
Automation and Robotics
Realtime Robotics, a Boston startup, raised $30m in Series B funding. They are building a collision free autonomous motion planning software for industrial robots. More here.
Notes:
While the solution is currently addressing the industrial segment, it has applications in the construction sector.
This is as it empowers multiple robots to work closely together in unstructured and collaborative workspaces, reacting to dynamic obstacles the instant changes are perceived.
Given the uncontrolled nature of construction and the need for safety, these solutions are required.
Home Services
EverFence, a Californian startup, raised $7m in Series A funding. They operate a fencing marketplace connecting contractors with homeowners interested in installing fencing including providing instant quotes. More here.
Notes:
There are an increasing number of solutions which wrap technology for home services.
An example is Roofer.com which uses drones / aerial imagery for residential roof inspections and providing quotes.
These companies use their technology to provide transparent and real time pricing to homeowners and be a top of funnel acquirer. They then have two options:
Operate a marketplace connecting homeowners to contractors (EverFence)
Become a technology enabled contractor using their solution to increase their margins (Roofer.com).
As the market evolves, it will be interesting to see the pathway startups follow.
There is an opportunity to transform and acquire customers in the home services market by offering modern B2C solutions (such as immediate pricing) to a target residential customer who is more transactional in their buying decision compared to other construction sectors (e.g infrastructure).
Oscar, a Portuguese startup, raised €6m in funding. They operate a home services marketplace app which connects 12,000 technicians (plumbers, electricians etc) to users while offering fixed prices for over 150 services. More here.
Weather Monitoring
WindBorne Systems, a Californian startup, raised $15m in funding. They have built a long endurance smart weather balloon which can fly autonomously for over a month collecting critical data needed to improve weather forecasts. More here (paywall).
[Hiring - 2 roles in Sales, 1 role in Finance, 4 roles in Software, 2 roles in Operations, 1 role in Other]
Notes:
For remote construction sites accurate weather data is critical for the supply chain e.g. deliveries and scheduling.
This provides an option to provide accurate and localized data.
Charging Infrastructure
Nio Power, a Chinese startup, raised $207m in funding. They operate and provide electrical vehicle charging and battery swap infrastructure. More here.
[Hiring - 1 role in HR, 2 roles in Finance, 1 role in Software, 1 role in Support, 7 roles in Other]
Notes:
Nio Power operates 2,427 battery swap stations and 22,595 charging piles in China.
According to them it is the largest network of such facilities with over 80% of the power serving non-Nio brand users.
Other
Claros Technologies, a Minnesota startup, raised $22m in funding. They develop Perfluoroalkyl and Polyfluoroalkyl Substances (PFAS) analytical and destruction technology. More here.
Notes:
PFAS is a major contaminant worldwide due to their detrimental impact on ecosystems and human health and the difficulty involved in eradication.
PFAS is a soil contaminant concern on construction projects which can result in significant costs as material may need to be replaced.
This is as they are often called ‘forever chemicals’ due to the difficulty associated with their destruction.
Delta Green, a Czech startup, raised €2.2m in funding. They are developing grid balancing software which allows households which have renewable energy sources such as solar or batteries to be grouped into a giant virtual battery. More here.
[Hiring - 4 roles in Software, 1 role in Operations, 1 role in Product]
Policy and Regulatory Changes
EU clears law to increase domestic green tech production
The EU has approved a law aimed at bolstering the bloc’s clean technology manufacturing capabilities.
The Net Zero Industry Act (NZIA), cleared on Monday, sets new goals for the EU to produce 40% of its solar panels, wind turbines, heat pumps, and other clean tech equipment domestically by 2030.
Europe is dependent on China which is projected to control 80% of global solar power manufacturing capacity.
Furthermore the bloc aims to achieve 15% of the global production of these technologies by 2040.
The NZIA proposes streamlining the granting of permits for projects that boost EU manufacturing, ensuring most are issued within six to nine months.
US Offshore Wind Farms Are Being Strangled With Red Tape
A number of companies (Ørsted, Equinor, BP, and Avangrid) have canceled contracts recently.
Altogether, the projects which have been canceled by the end of 2023 were expected to provide 12 gigawatts of power (<50% of the capacity in the project pipeline).
A reason for this is the difficulty in approval for offshore wind in the US.
Before a company bids, the developer must plan the procurement of the entire farm including reserving components (e.g equipment, turbines, cables).
The bid must be cost competitive due to the amount of interest. Once they win they purchase the ocean lease (~$100s of millions) though they still do not have the right to build the farm.
They then must complete site assessments, consider offtake agreements, construction and operation plans and are subject to an environment review.
This process takes 5 years.
After this they still have to receive permits from local, tribal, state, regional and federal agencies while the Bureau of Ocean Energy Management consults with other agencies for approval.
During this time (until recently) the bid is maintained at the price it was placed at.
Many of the bids were placed before COVID supply chain shocks resulting in a significant rise in cost for developers.
Notes:
It can be incredibly difficult to build new infrastructure in the US due to the complexity of regulation.
Electrification is resulting in an infrastructure transition and while there is appetite to build, the biggest bottleneck continues to be approvals and regulations. It is unclear if there is the political will to remform this.
Related:
The Biden administration announced the creation of a Nuclear Power Project Management and Delivery working group.
It will draw on leading experts from across the nuclear and megaproject construction industry to help identify opportunities to proactively mitigate sources of cost and schedule overrun risk.
The US Army will release a Request for Information to inform use of advanced reactors on Army sites.
Small modular reactors can provide defense installations with resilient energy for several years amid the threat of physical or cyberattacks, extreme weather etc.
Notes:
Nuclear is increasingly seen as a viable and resilient backbone to a renewable energy grid.
Small modular reactors allow large factories or Army bases to have secure, consistent and resilient energy supply.
Related:
The Shape of Nuclear Policy (Construction Physics)
Lawmakers Demand Emissions Data for $8 Billion Federal Hydrogen Hubs
Two Democrats are demanding the DoE report projected lifecycle emissions for seven federally-funded hydrogen hubs.
The hydrogen hubs were finalized in 2023 with 7 hubs aiming to produce more than 3 million metric tons of hydrogen each year.
They aim to scale up hydrogen production for transportation hydrogen uses like trucking.
Hydrogen could displace some fossil-fuel use but its production can generate carbon emissions as well, including in the form of "grid emissions" from electricity used to power that production.
At halfway mark, majority of infrastructure law funds yet to be spent
The US is halfway through the five-year Infrastructure Investment and Jobs Act.
Only 38% of the funding has been announced.
That is a 13.5% increase in the past 6 months indicating that while it is ramping up it still labs.
There are 56,000 projects and awards that are identified or now underway at over 4,500 localities.
Notes:
There is still a large amount of funding available.
In the lead up to the next US election, there is an expectation of increased deployment of funding from this Act and new project announcements.
21 states, DOE launch initiative to spur grid-enhancing technologies, advanced conductors
The effort is aimed at “squeezing out every amp we can.”
The parties pledged to increase state and federal cooperation on intraregional and interregional transmission planning.
Notes:
Power availability is becoming a critical problem in the US.
There has been increasing investment in renewable energy generation however the critical problem is transmission / grid infrastructure.
There will be more coordination between state and federal authorities including regulatory change and funding to address this issue.
New Building Permit Hub launched to speed up homebuilding (British Columbia, Canada)
Under the system Builders will submit their permit applications online in the hub, which will:
standardize building-permit submission requirements across jurisdictions in B.C.;
automatically check that the permit application is complete; and
automatically check compliance with key parts of the BC Building Code.
Notes:
Permitting and approval deadlines are a significant inhibitor on construction and this solution could alleviate this.
Brownfield clean-up job training programs can get $14M from EPA
Local governments and nonprofits can apply for federal funding to recruit and train unemployed and underemployed local workers.
These workers will be used to clean up polluted sites for redevelopment.
A total of $14 million is available in total with the EPA expecting to award about 20 grants at up to $500,000 each.
FTA publishes climate resilience guidebook for transit agencies
The Federal Transit Administration released its transit resilience guidebook.
This provides resources for agencies on how to adapt to and recover from climate driven events (e.g. extreme weather).
National Infrastructure Projects & Priorities
United States
California approves $6.1B transmission plan
The grid operator also greenlit a plan to bring power from a New Mexico wind project.
The 550-mile transmission line will be able to carry 3,000 megawatts of power from New Mexico to Arizona, where a substation will route the power to California.
The line, which started construction last year after getting federal approval, is being developed alongside a 3,500 MW wind facility in New Mexico.
‘I don’t know how this happened’: A $3B secret program undermining Biden’s tech policy
As part of the $39b allocated for chip manufacturing on US soil, $3.5b has been revealed as earmarked for a Department of Defence ‘Secure Enclave.’
This is rumored to be a national security initiative to make and package microchips in a special facility for defense and intelligence applications.
It arises from the Pentagon’s struggle with sourcing trustworthy high-end microchips.
Notes:
This initiative represents a new direction in nearshoring economics.
As part of nearshoring, Western nations are seeking to build an alternative supply chain that is not reliant on China.
The CHIPS Act exemplifies the US's efforts to build critical semiconductor infrastructure to ensure ongoing economic growth.
The 'Secure Enclave' is an example of constructing critical infrastructure to ensure military supremacy.
The continued focus on supply chain resiliency is driving increased funding and interest in industrial construction.
Canada
CIB invests $337M in western Canadian hydrogen infrastructure
The Canada Infrastructure Bank (CIB) has provided a loan to HTEC, a designer, builder, owner and operator of hydrogen supply solutions.
The investment will contribute to the implementation of HTEC’s H2 Gateway, a full-service, sustainable fuel supply chain focused on reducing emissions in the transportation sector.
HTEC plans to build and operate an interprovincial network of up to 20 hydrogen refueling stations to support the deployment of fuel cell vehicles.
India
Modi Bets His Legacy on $534 Billion Infrastructure Boom in India
In February Modi’s government allocated 11.11 trillion rupees ($133 billion) to capital expenditures (3x from 5 years ago).
Over the next two years, 44.4 trillion rupees ($534 billion) worth of new infrastructure is set to come online.
India is laying as much as 37 kilometers of new highways a day, boosting the total length by 60% during Modi’s time in office to 146,000 kilometers with 80 new airports built in the last decade.
Modi’s goal is to complete a nationwide upgrade of the country’s infrastructure, as well as big outlays on digital infrastructure like new data centers, fiber-optic lines and an expanded digital payments system.
Notes:
This infrastructure spending is expected to lift India’s economic growth to 9% by 2030.
It is also expected to increase India’s public debt to 82.3% of gross domestic product this fiscal year.
The spending is part of a regional play to boost connectivity, cut business costs and make India a more attractive destination for manufacturers and foreign investors looking for an alternative to China.
China
China Creates $47.5 Billion Chip Fund to Back Nation’s Firms
China’s goal is to attain self-sufficiency in its domestic chip industry.
It is seen as an attempt to counter US moves to challenge their manufacturing strength including Biden’s move to ban the sale of sophisticated AI chips to china and increase the tariff rate on Chinese semiconductors from 25% to 50% by 2025.
Superpowers led by the US and European Union have funneled nearly $81 billion into building the next generation of semiconductors.
The Biden administration’s 2022 Chips and Science Act includes $39 billion in grants for chipmakers, as well as $75 billion in loans and guarantees.
Notes:
China’s response to the US investment in semiconductor development is expected.
This will increase competition in the sector and continue to drive investment in specialized infrastructure and manufacturing capability.
China switches on first large-scale sodium-ion battery
The company said the facility is the first large-scale project of its kind in China, and the first phase of a 100 MWh global project.
Notes:
This is significant as compared with lithium-ion batteries, the raw material reserves of sodium-ion batteries are abundant.
This kind of battery storage infrastructure project could be replicated throughout the world.
The ML-1 railway project, estimated to cost over $6 billion, focuses on the dualization of the existing railway network and the overall upgrading of tracks connecting the port city of Karachi to Peshawar.
It is now ready for the bidding process among eligible Chinese companies.
Officials in Beijing and Islamabad held the 13th Joint Cooperation Committee (JCC) meeting online on Friday.
The JCC meeting focuses on joint energy and infrastructure development initiatives under the multibillion-dollar China-Pakistan Economic Corridor (CPEC).
Acquisitions
Persimmon PLC, a British homebuilder, is exploring a £1 billion ($1.27 billion) takeover bid for competitor Cala Group. More here.
News
Lendlease to exit international construction, development
Lendlease, an Australian contractor and developer, announced it will pull out of international construction and development within the next 18 months to focus on the domestic market.
The real estate giant will exit or sell over $4 billion worth of international works, largely based in the US and UK, over the next three years.
It will sell its US east coast construction business to Consigli.
US data center electricity demand could double by 2030, driven by artificial intelligence: EPRI
What makes an AI data center different?
AI requires more power to carry out its computationally intensive tasks, including machine learning and quickly retrieving answers to myriad queries.
Generative AI, like the large language models that fuel OpenAI’s ChatGPT, can be 100 times larger than other AI models—so they need even more electricity.
That increased processing power comes from graphics processing units, or GPUs which can reach 176 degrees Fahrenheit when running at maximum power.
The International Energy Agency forecasts that by 2026, data centers globally will use an amount of energy per year equal to Japan’s electricity consumption.
Microsoft hired two nuclear experts to spearhead its quest for alternative power sources.
Notes:
This trend is resulting in an increase in:
Data Centre construction.
Renewable energy infrastructure.
Transmission and power grid upgrades.
Chipping in on semiconductor fabs (McKinsey)
US semiconductor companies have announced investments for new facilities that are estimated to reach $200 billion to $350 billion within the next decade.
The largest announced investments in U.S. semiconductor manufacturing are in Arizona ($62 billion), Texas ($52 billion), New York ($21 billion), and Ohio ($20 billion), while the smallest are in Colorado and Oregon ($1 billion each), and Indiana ($2 billion).
Hydrogen Energy Is Getting A Heavy Infusion Of VC Funding
Over the past four months, developers of technology to produce and distribute low-emission hydrogen have raised more than $1 billion in venture investment.
Investors’ stepped-up interest in the space indicates they see the requisite combination of government incentives, tech-enabled cost reductions, and market receptiveness in place now to produce compelling outcomes.
Notes:
As discussed previously, our future is unlikely to be electric vehicle only, this is as:
Mineral supply will be unable to keep up with demand.
Electricity generation will be unable to keep up with electrification demand.
Due to this I believe hydrogen or hybrid vehicles will become more common.
Heavy vehicles such as trucks could be serviced by hydrogen given the relatively fixed routes meaning a lower amount of infrastructure investment for refueling stations.
Can GPT-4o Be an Architect? (from AI - AEC digest - a great newsletter on AI in AEC by Mayur Mistry)
If I missed anything this week, please reply and let me know! I’ll make sure to include it next week.