Last Week in ConTech - 08 July 2024
Saudi Arabia to become the world’s largest construction market
Last Week in ConTech is a summary of the most important construction 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:
10 Startup Fundings
9 Policy and Regulatory Changes
7 New National Infrastructure Projects & Priorities
2 New investment funds
2 Acquisitions
7 News articles
36 open jobs - view here
Reading time: 15 mins
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Startup Funding
Waste
Sensorita, a Norwegian startup, raised $3.25m in Seed funding from investors including Brick & Mortar Ventures. They are developing a waste management solution where they place sensors in construction waste bins and use radars to help companies know where their bins are and how full they are to automate collection processes. Traditionally bin levels are monitored manually. More here.
Notes:
The construction and demolition industry accounts for over 37% of all waste in the EU.
Building Decarbonization
AeroShield, a Boston startup, raised $14m in funding. They produce transparent silica aerogel inserts for windows which are super light and super insulating materials improving energy performance by up to 65%. More here.
[View open jobs - 1 role in HR, 1 role in Other]
Notes:
It is important for building owners to select windows which are appropriate for their climate.
Heat gain and heat loss through windows is responsible for 25-30% of residential heating and cooling energy use.
There is tremendous opportunity in this sector with the global architectural glass market valued at ~USD 84.15 billion in 2022 and is expected to reach USD 127.37 billion by 2028.
(architectural glass is glass that is used as a building material).
Related:
UNSUSTAINABLE: Windows, 2150 VC
Phaidra, a Washington startup, raised $12m in funding. They have developed an AI Copilot solution which helps mission critical facilities (such as data centers) optimize their cooling systems. More here.
[View open jobs - 12 roles in Software, 2 roles in Support, 2 roles in Other]
Notes:
As discussed in this issue, data centers are accounting for a large portion of energy demand with Ireland, Germany, Singapore and China imposing rules on new construction.
In the US, it is predicted that data centers will use 8% of the total power supply by 2030 (vs 3% in 2022). This is as AI data centers have higher energy demand than traditional data centers.
The average data center’s cooling system consumes ~40% of the center’s total power.
Phairdra’s solution represents a step change in building automation solutions with their AI agents acting as virtual plant operators to optimize energy use.
Unlike the traditional system which uses hardcoded protocols, the AI ingests sensor data at the plant level, optimizing the system in real time.
This team comes from Google’s DeepMind where they developed AI solutions to reduce energy usage in data centers by optimizing cooling systems by 40%.
Related:
Investing in the rising data center economy - McKinsey
Why we invested in Phaidra - GS Futures (GS Group is a South Korean energy, retail and construction conglomerate)
Generative Design
Gendo, a London startup, raised $1.1m in Pre-Seed funding. They have developed a generative AI platform for architects and designers which helps to turn architectural designs into visualizations, a process which used to take weeks. More here.
[View open jobs - 7 roles in Software, 1 role in Marketing, 1 role in Sales, 1 role in Product, 1 role in Design]
Notes:
Gendo’s solution improves on mainstream generative visualization platforms, catering to industry-specific needs.
Architects can provide 2D drawings, sketches, or text prompts to create detailed visualizations.
They can refine visualizations by masking and tweaking details such as colors, lighting, and structural features.
Architects can also add era-specific furniture, culturally appropriate clothing, and topographically correct trees.
This iterative process with AI, where architects modify visualizations from ~50-80% to a final product, provides a look at the future of engineering design workflows.
Engineers will similarly use text or drawing-based prompts for generative design solutions.
These solutions will produce various engineering design options, allowing engineers to select and modify specific sections to meet their needs. Having granular control over the output is important.
Materials Decarbonization
Alcemy, a Berlin startup, raised $10m in funding. They have developed an AI solution which provides quality predictions throughout the clinker production process at ready mix concrete plants. The AI forecasts the quality parameters based on sensor readings to calculate target values to optimize current production and feed into the manufacturing process to help decarbonize operations. More here.
[View open jobs - 3 roles in Software, 2 roles in Support, 1 role in Sales, 1 role in Marketing]
Notes:
TITAN America, a subsidiary of Titan Group, is a customer.
Alcemy is to deploy its AI quality control software at a plant in Florida.
Cambridge Electric Cement, a UK startup, raised £2.25m in Seed funding. They are developing a sustainable recycled cement which is produced from the concrete waste from the demolition of old buildings. More here.
Ecomaterials, a Utak startup, raised $75m in Debt funding. They produce and distribute supplementary cementitious materials. More here.
Site Monitoring
Sostark, a Dutch startup, raised €2m in Seed funding. They are a technology incubator known for its wireless technology solutions and part of the funding will be used for their latest spin off, TokenMe, a SaaS solution enhancing safety and security on construction sites through real time reporting and management of personnel and assets. More here.
Notes:
TokenMe’s solution involves the use of tokens which broadcast time, location and movement as well as monitor temperature, humidity and air quality.
This allows General Contractors to have real time insights and heat maps of personnel on construction sites and is GDPR compliant.
Additionally it could be used by a GC to confirm labor related payment claims.
Other
Fastned, a Dutch startup, raised €32.9m in debt funding. They build and operate fast charging infrastructure for electric vehicles across Europe. More here.
Kimbel, an Arkansas company, received investment (undisclosed). They are a mechanical contractor servicing the residential and commercial marketing with plumbing, HVAC and electrical needs. More here.
Policy and Regulatory Changes
SCOTUS overturns Chevron doctrine, limiting federal agency reach
The US Supreme Court overturned the Chevron Doctrine.
This laid forth the legal standard by which a federal court would defer to the government agencies expertise in interpretation of a law or statute if ambiguous and if the interpretation is reasonable.
The rationale was that agencies have specialized expertise and are better positioned to interpret complex and technical statutes within their domain vs the courts.
This change takes power away from agencies such as the EPA in dictating the execution of statute.
Instead courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority.
Notes:
This ruling change has widespread implications.
The Chevron doctrine allowed government agencies de facto authority in the interpretation and therefore the implementation of the law.
This change means that the court is the independent authority which interprets the rule of law and acts as a ‘check’ against potential government agency overreach.
It means that this change could result in an increase in litigation as agencies face challenges to their rules.
This could result in agencies being more cautious moving forward and more ‘modest’ regulations being implemented.
OSHA proposes rule to protect workers from extreme heat
The proposed rule would require employers to develop a Heat Injury and Illness Prevention Plan to control and mitigate hazards in workplaces impacted by excessive heat.
It would require employers to evaluate heat risks and, when necessary, provide drinking water, rest breaks and control of indoor heat.
It also would require plans for workers unaccustomed to working in high heat.
This will affect construction sites.
UK water companies at risk of claims after Supreme Court sewage ruling
A new ruling from the Supreme Court allows private landowners and individuals to seek redress for sewage released in UK waterways.
The court case between the Manchester Ship Canal and United Utilities over contaminated discharges stated that "Discharges of foul water from the outfalls could be avoided if United Utilities invested in improved infrastructure and treatment processes."
Notes:
This will have an impact on water infrastructure investment to reduce sewage spills and subsequent investments in technology.
The US Wants to Integrate the Commercial Space Industry With Its Military to Prevent Cyber Attacks
As more infrastructure is deployed in space, the risk of cyber attacks and disruption continues to increase.
The US military wants to team up with the private sector to protect these assets.
The new partnership, called Commercial Augmentation Space Reserve (CASR), would expand the relationship between the government and commercial interests.
It will see private sector equipment embedded into military units, used in training exercises and actual operations.
Notes:
Space is increasingly becoming a domain to watch from an infrastructure perspective.
The US is planning on creating a long term habitat on the moon by the end of this decade and tapping on corporate partners such as ICON or Northrop Grumman for construction expertise.
Additionally there is increasing investment and funding in the Space construction sector with Bechtel interested in developing Off-world infrastructure and could be actively building in Space in the next 10 - 20 years.
While there is opportunity in Space Construction, the deepening of ties between Government and Private indicates that the majority of contracts will be provided to companies which meet national security imperatives (which could be more onerous than currently required).
Young Fusion Energy Bill passes congress, heads to President’s Desk
The US Senate passed bipartisan legislation which accelerates the development of commercial fusion energy.
The Fusion Energy Act will codify the Nuclear Regulatory Commission’s (NRC) regulatory authority over commercial fusion energy systems to streamline the creation of clear federal regulations to support the development of commercial production facilities.
Notes:
There is a favorable regulatory and political landscape relating to nuclear energy.
Developing capability in infrastructure construction related to nuclear could be valuable as the sector is expected to grow (pending technology advancements).
Related:
FTA offers $1.9M in grants for tech that improves riders’ public transportation experience
The Federal Transit Administration is accepting applications for $1.94 million available for technology projects that seek to improve transit customer experience.
Two categories of projects are eligible for funding being:
Technology solutions such as software or apps that facilitate public transportation that can be dispatched on demand, much like ride-hailing.
Concepts or demonstration projects that focus on creative financing, new partnerships, integrated payment methods or innovative ways to deliver service.
Creation of international standard on net zero gets underway
The International Organization for Standardization (ISO) is developing the first international standard for net zero.
It is expected to launch at COP30 in November 2025.
Canada, inspired by EU and US, considers imposing import tariffs on Chinese EVs
Canada is considering whether to impose tariffs on China made electric vehicles.
This would be to align itself with allies such as the US and EU.
It is unclear if this would be associated with subsidies with domestic manufacturing capability.
Senate passes Johnson bill protecting military installations and critical infrastructure
The Ohio Senate has passed Senate Bill 226.
The legislation prevents individuals, businesses, organizations, and governments from specific foreign countries from buying land within 25 miles of a military installation such as bases or airports, or critical infrastructure facilities.
National Infrastructure Projects & Priorities
US
Geothermal system is a US first
The nation’s first networked geothermal system owned by a utility went live June 4 in Framingham, Massachusetts.
A $15m network of ground-source heat pumps will cool and heat 36 buildings without fossil fuels.
The 2 year pilot aims to offer lessons for other communities and the potential for the technology.
EU
Germany to Provide $3.2B in Guarantees for Hydrogen Grid Project
The EU commission has approved support for the construction of the Hydrogen Core Network.
This enables the creation of hydrogen transmission infrastructure required to foster the use of renewable hydrogen in industry and transport.
The first major pipeline is expected to be operational from 2025 with completion of the entire network expected in 2032.
EU Commission clears Romania’s plans to build two new nuclear reactors
Adding these two new units will change Romania’s electricity mix.
Nuclear power will be expected to account for ~30% of the country’s electric production up from 20%.
China-Europe freight train network opens new route
The China-Europe freight rail service, which facilitates the movement of goods between China and European nations, has opened a new route.
This will depart from Xi'an in Northwest China, pass through Kazakhstan via Horgos in Xinjiang Uygur autonomous region, cross the Caspian Sea, and reach Baku, Azerbaijan.
From Monday, the service will run every week on a regular basis.
Australia
Albanese's Future Made in Australia Act to include community benefit principles
The Australian Government is introducing a $22.7b Future Made in Australia Act which is a manufacturing push in answer to Joe Biden’s Inflation reduction act.
A key aim is to unlock private sector investment to drive “a more diversified and more resilient economy powered by renewable energy.”
This includes a $1.7 billion innovation fund to develop emerging industries and $13.7 billion in tax breaks for green hydrogen and processed critical minerals from 2027-28.
There are five community benefit principles, one of which is Strengthen domestic industrial capabilities including through stronger local supply chains.
The projects are to align with a new National Interest Framework, prioritizing crucial national security projects or those offering a comparative advantage for Australia.
Notes:
Western Alliance countries are increasingly seeking to invest in domestic manufacturing capabilities, localized supply chain and enhancing economic resiliency.
This appears to be to reduce reliance on China and build geopolitically resistant supply chains.
China
China's first commercial space launch site ready for operations
The site is China’s first dedicated facility for commercial space missions.
Future plans include expansion for additional launch pages aimed at providing both domestic and international rocket and satellite launch services.
The expansion is expected to accelerate China’s advancements in commercial space technology.
Notes:
As investment in space and offworld construction rises, there will be a need for investment in spaceport infrastructure.
An example is PLD Space who raised funding in April to construct their own spacetech infrastructure.
China opens largest single construction phase high-speed train maintenance depot
CHINA Railway Construction Corporation (CRCC) has completed the country’s largest high-speed train maintenance depot.
The new facility has depot buildings totalling 62,000m2, including a 12-track workshop, and 5.6km of track.
The new facility has an integrated control system that monitors vehicles and provides condition information in real time which can inspect trains passing at up to 30km/h.
Investment funds
8090 Industries, a New York venture fund, raised $100m for its second fund. They will invest in industrial decarbonisation including energy and infrastructure. More here.
The Westly Group, a Californian venture fund, raised a $100m fund. They will invest in the energy, mobility, building and industrial sectors. More here.
Acquisitions
WakeCap, a provider of IoT-based workforce management solutions has acquired Crews by Core, a San Francisco Construction Field Execution Platform which helps to manage schedules. More here.
Notes:
WakeCap's product collects data through a knob that attaches to a standard hard hat worn by site workers and pipes data into an app for tracking hours, progress, and safety.
Hexagon, a Swedish industrial technology company, acquired Voyansi, an AEC focused provider of BIM and VDC solutions, reality capture services and BIM workflow software development. More here.
News
Saudi Arabia poised to become world’s largest construction market
The total construction output value in the country is expected to reach $181.5 billion by the end of 2028, which represents a nearly 30% increase from the levels seen in 2023,
In 2023, contracts worth over $140 billion were awarded for construction projects.
The Blueprint: The Rise of the Building Material Distributors (Ironspring Ventures)
Construction is ~14% of global GDP and ~5% of US GDP.
For the average construction project, 30-50% of the total cost is labor and the other 50-70% is materials.
The building products distribution market in North America and Europe is worth over $800b.
There is a rising opportunity in the building material distributor market highlighted by the following market moves (from the article):
The Home Depot announced on March 28 plans to acquire SRS Distribution for ~$18.25b. The acquisition was completed last month.
Serial entrepreneur Brad Jacobs announced in early December 2023 the formation of a new company, QXO, to modernize building materials with a goal of reaching a $5B revenue run-rate within 3 years (raised $3.5B in private placement)
In early June 2024, AD and IMARK Electrical announced plans to merge. This merger of equals will create a 725 location electrical division within AD, which already has 1,410 independent locations including its current electrical division.
Interview With Patric Hellermann, Co-Founder and GP at Foundamental
Foundamental are a Construction Tech focused VC.
Compute in America: Building the Next Generation of AI Infrastructure at Home (Institute for Progress)
The Institute for Progress is launching a new series which proposes three goals for the AI infrastructure build out:
We should build AI computing infrastructure in the United States.
We should unleash clean energy to make it happen.
We should accelerate the development of security technologies to protect the AI intellectual property of the future.
The first article in the series by Brian Potter (Construction Physics) explains How to Build an AI Data Center
Notes:
This series provides value in understanding the rise of AI technology and its need for physical real estate to provide processing power and the relationship / impact on the renewable energy infrastructure transition.
Tech Industry Wants to Lock Up Nuclear Power for AI
Around one third of US nuclear power plants are in talks with tech companies to provide electricity to new data centers to meet the AI demand.
Previously, nuclear plants struggled to compete with wind, solar and natural gas, prompting a wave of closures (there was overbuilding in the 90s).
Tech companies are willing to pay a premium for nearly uninterrupted, carbon-free power which can make good on climate-change pledges while powering AI.
The Vanishing Islands That Failed to Vanish
Low-lying tropical island nations were expected to be early victims of rising seas from climate change.
But research tells a surprising story: Many islands are stable. Some have even grown.
Costco's bold new plan for the California housing crisis
Costco is launching affordable housing.
An argument is that this was completed to overcome the difficulty with gaining approval for new big box retail stores in South LA.
If I missed anything this week, please reply and let me know! I’ll make sure to include it next week.