Last Week in ConTech - 22 July 2024
Insurance companies are forcing changes in construction standards + AI needs entirely new infrastructure
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:
18 Startup Fundings
12 Policy and Regulatory Changes
7 New National Infrastructure Projects & Priorities
0 New investment funds
0 Acquisitions
8 News articles
56 open jobs - view here
Reading time: 16 mins
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Startup Funding
Payments
Adaptive, a New York startup, raised $19m in Series A funding from investors including Foundamental. They provide workflow automation tools for financial management including budgeting, expense tracking, accounts payable and electronic payments for builders, remodelers and developers. More here.
[View open jobs - 2 roles in Sales, 1 role in Software, 1 role in Marketing]
Coast, a New York startup, raised $40m in Series B funding. They offer fuel cards and a real time financial platform managing fleet related expenses for ‘real world’ field personnel business such as plumbers, HVAC businesses, landscapers and construction companies. More here.
[View open jobs - 3 roles in Sales, 1 role in Operations, 2 roles in Marketing, 1 role in HR, 1 role in Design, 2 roles in Software]
Notes:
As mentioned in this issue, Coast raised $25m in funding at the end of March.
Coast is focusing on the construction industry as they recognise they have data needs regular corporate cards do not provide.
Firms want detailed real time visibility on employee spendings at a line item level.
This allows them to provide insights such as how many liters of which fuel grade is being bought for which vehicle.
Building Decarbonization
VARM, a Berlin startup, raised $5.7m in seed funding from investors including Foundamental. They have developed an air-gap insulation solution for building decarbonization. To address the installation worker shortage, they have developed a business in a box solution called the ‘Cloud Installers’ initiative to train new installers. More here.
[View open jobs - 4 roles in Sales, 2 roles in Operations, 1 role in Marketing, 1 role in HR]
eLstar Dynamics, a Dutch startup, raised €2m in Series A funding. They developed a smart glass solution. More here.
Notes:
The global architectural glass market is 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).
Heat gain and heat loss through windows is responsible for 25-30% of residential heating and cooling energy use.
Tether, a New Zealand startup, raised NZ$655k in funding. They have developed easy to install sensors for buildings which provide insights on performance benchmarks as well as predictive maintenance reports and actions to optimize heating, cooling and lighting systems. More here.
Safety
HammerTech, an Australian startup, raised $70m in Growth funding. They have developed a solution which streamlines safety, compliance and site operations. More here.
Compliance
kolum, a Berlin startup, raised €2.1m in pre-seed funding. They have developed a regulatory compliance platform which helps EU companies ensure Carbon Border Adjustment Mechanism (CBAM) compliance and aids manufacturers in calculating and sharing emission data accurately. More here.
[View open jobs - 1 role in Sales]
Notes:
EU companies which import cement, iron, steel, aluminum, fertilizers, electricity, or hydrogen from non-EU countries must comply with the Carbon Border Adjustment Mechanism (CBAM) regulation.
This prices in the CO2 emissions of imported products.
The regulation demands detailed data reporting and imposes fines for non-compliance.
Similar regulation has been proposed in other regions such as the UK which is planning to implement their requirements by 2027.
Training
doinstruct, a German startup, raised €7.6m in funding. They are developing a low-threshold, multilingual mobile training solution for frontline workers allowing employees to be trained by smartphone in any location. They have gained traction in construction, logistics and food. More here.
[View open jobs - 2 roles in Support, 2 roles in Software, 1 role in Product, 1 role in HR, 1 role in Finance]
Home Services
Adam, a Czech startup, raised €3m in Seed funding. They are building a platform which connects tradespeople with customers initially focusing on painting services and apartment renovations. More here.
[View open jobs - 6 roles in Sales, 1 role in Software]
Notes:
The platform provides customers with an online calculator which shows them the estimated job cost (quote).
They can then immediately request for a tradesperson to complete the work.
My notes:
As Adam grows they have a choice between remaining as a marketplace or acquiring home services contractors to self-perform.
Self performing provides benefits in consistent customer experience, guaranteed supply and entry to a new market.
It’s an expansion strategy which was followed by Roofer.com where they purchased a contractor to enter a new market and monetise by capturing additional margin vs selling their product.
Consumers want simple and transparent quotes to make purchasing decisions. Startups which capture the top of the funnel through SEO and calculators, have the opportunity to aggregate demand in a market.
Related:
The cloud installer model (Foundamental)
Grid Infrastructure
Heimdall Power, a Norwegian startup, raised $25m in Series B funding. They have developed sensors which are installed by autonomous drones on live power lines allowing utilities to identify faults and assess transmission capacity in real time and provide hyper local weather and line sag data. More here.
[View open jobs - 4 roles in Software, 2 roles in Operations, 2 roles in Sales, 1 role in Marketing, 1 role in Construction]
Notes:
The clean energy transition is an infrastructure transition.
A bottleneck for renewable energy generation is the development of new power line infrastructure.
There are long lead times for this infrastructure with permitting taking up to 4 years (new legislation is aiming to reduce this to 2 years).
Therefore it is important to understand and maximize the capacity of existing infrastructure.
Water
Upwell Water, a San Francisco startup, raised $100m in funding. They own operating and build water supply, treatment and utility assets globally. More here.
Notes:
In the US there are 55,000 water utilities and 16,000 wastewater utilities.
These utilities don’t have access to experienced operators or capital to maintain and improve their systems which Upwell can provide.
Enzo, German startup, raised €2.3m in Seed funding. They have developed an IoT and AI based technology that monitors a buildings water pipes to identify anomalies and inform of leaks to minimize damage and water loss and offer an insurance solution. More here.
[View open jobs - 4 roles in Software, 1 role in Operations]
HVAC
Evercloak, a Canadian startup, raised CAD$1.1m in seed funding. They are creating ultra thin nanofilms for dehumidification (HVAC technology) which reduce the amount of electricity required to dehumidify air and can be used in buildings and industrial processes. More here.
Notes:
Air conditioning already accounts for 10% of the world's electricity consumption.
Dehumidifying air is the most energy intensive part of cooling.
Quatt, an Amsterdam startup, raised €25m. They develop and install smart heat pumps. More here.
Housing
Lhoopa, a Filipino startup, raised $80m in Seed funding. They are building a platform to help support the development of affordable homes through facilitating the buying, selling and building of homes. More here.
[View open jobs - 1 role in Finance, 1 role in Marketing]
Notes:
Lhoopa’s platform uses AI to analyze market trends and identify properties.
These properties are sent to brokers and contractors in theri network to determine which can be bought, renovated or built up to make them available to potential buyers.
If a property is identified to be renovated or built up, the work is completed by a contractor partner.
Lhoopa has developed an app for these partners which allows them to upload pictures and videos to communicate construction progress.
The data from the app is used to approve payments to contractors.
Charging Infrastructure
Ionna, a Californian joint venture, received investment. They are developing and deploying a nationwide network of EV charging stations with technology, retail integration, amenities and customer service. More here.
Notes:
Ionna was founded by seven automakers - BMW, General Motors, Honda, Hyundai, Kia, Mercedes-Benz, and Stellantis.
itselectric, a New York startup, raised $6.5m in Seed funding. They provide curbside charging infrastructure. More here.
[View open jobs - 1 role in Sales, 1 role in Design]
Notes:
Their charging posts eliminate the need for utility permitting, connection and coordination by connecting behind-the-meter drawing spare electrical supply from adjacent buildings.
This allows them to be installed at zero cost to property owners or cities and share the revenue with property owners.
Other
Naked Energy, a British startup, raised £17m in Series B funding. They develop and install solar technology for installation on residential roofs. More here.
Policy and Regulatory Changes
New initiative seeks innovations to streamline NYC’s building process
The New York City Department of Buildings with the Partnership Fund for New York City has launched the Buildings Tech Lab for innovations in construction tech.
The goal is to find, evaluate and test innovative technology solutions that will help the DOB manage construction in the city.
They are to host a competition to find solutions in key priority areas.
These include how to expedite permitting, building inspections, code reviews and enforcement initiatives and how to better use data to automate operations and increase staff capacity.
Policy statement on onshore wind (UK)
The new British government has stated they are committed to doubling onshore wind energy by 2030.
They have immediately removed the de facto ban on onshore wind in England, which was in place since 2015.
Notes:
One of the party's election promises is to have clean power by 2030.
This involves doubling onshore wind, tripling solar power, and quadrupling offshore wind within the decade.
What does this mean for construction?
The UK will need to rapidly expand the electricity grid. Grid tech will be a winner from this.
The party has stated that nuclear and small modular reactors are important for energy security.
They have also stated they will invest in hydrogen.
Ohio utility proposes new data center tariffs, angers tech giants
The Public Utilities Commission of Ohio is proposing to create two new tariffs designed to help the company accommodate an unprecedented amount of anticipated load growth from an influx of new data centers.
This includes:
A “Data Center Power” tariff for new data center customers with a monthly demand of 25 MW or more.
A “Mobile Data Center” tariff for new mobile data center customers, such as cryptocurrency miners, with a monthly demand of more than 1 MW.
The changes are to protect existing customers from “bearing the burden of new transmission if new large load customers do not ultimately connect to the system after committing.”
Notes:
To meet the data center demand, Ohio has to spend money to upgrade its grid.
They want security in case demand does not eventuate e.g if the data center demand does not grow and no one is able to pay for the additional capacity investment.
US, Mexico move to thwart China circumvention of tariffs
The administration has implemented a North American "melted and poured" standard for steel.
Under this policy, steel product imports from Mexico will be subject to 25% tariff unless the steel is documented to have been melted and poured in Mexico, the U.S. or Canada.
Additionally, aluminum product imports from Mexico must not contain primary aluminum that is smelt or cast in China, Russia, Belarus or Iran to avoid the 10% tariff.
In 2023, the US imported ~50% of its steel ($3b) from Mexico.
Notes:
Protectionist policies are rising in the US with tariffs generally gaining bipartisan support.
As the US attempts to improve its supply chain resiliency by importing from allied nations, this is creating growing investment in manufacturing and infrastructure upgrades to meet the demand.
For construction companies, understanding the tariffs being applied helps to identify growth opportunities.
For example, nearshoring is increasing investment in port facilities in Mexico and infrastructure to connect these.
Government signals intention for remote building inspections to be the default (New Zealand)
The Government is to release a discussion document on how building inspections via phone apps is becoming the default approach for building consent authorities (e.g. councils).
This will address matters such as whether remote inspections are suitable for all phases of construction and the circumstances in which in-person inspections may be required.
The Auckland council currently completes around 400 remote inspections each month.
Seattle encourages office-to-residential conversions with new law
This is aimed at addressing two major challenges facing the city:
Downtown offices emptied by the post-pandemic shift to remote work
A housing shortage
The legislation provides exemption from design development standards.
Despite the idea of office to residential conversions gaining traction, it often is more expensive to convert office buildings to housing than to build new housing.
NYC bets big on porous pavement with $32M flood-control project
This is their first large-scale implementation of porous pavement which allows stormwater to drain into the ground rather than overwhelm the city’s sewer system.
Seven miles of road in Brooklyn will be outfitted with the porous pavement.
The move is part of New York City’s push to build out green infrastructure, which filters and absorbs stormwater where it falls.
Notes:
Porous / permeable pavement has long been considered as a solution to mitigate flooding.
It will be interesting to see how this pavement performs including in terms of strength and wear.
The plan proposed to cap rent increases at 5 percent for apartments owned by anyone who owns 50 or more apartments or risk losing current federal tax breaks.
It also involves repurposing public land to build up to 15,000 additional affordable housing units to be built in Nevada.
The US announces $160 million to boost market for green materials
The EPA estimates that the construction materials used in buildings and other built infrastructure account for more than 15% of annual global greenhouse gas emissions.
Biden Offers $1.7 Billion to Help Factories Build Electric Vehicles
The Department of Energy has announced a $1.7B initiative to convert 11 shuttered or at-risk auto manufacturing plants into EV production facilities.
Companies have invested more than $100 billion in U.S. electric vehicle and battery manufacturing since the Inflation Reduction Act was passed two years ago.
Several of the factories are in Pennsylvania, Michigan or Georgia, states where narrow margins will determine the outcome of the presidential election.
Notes:
Clean energy manufacturing has received an increase of funding over the last 2 years.
It remains to be seen how the presidential election outcome could influence the growth of construction in this sector.
Related:
3 strategies to decarbonize transportation: US DOT report
The U.S. Department of Transportation released a 44-page report to Congress July 12 on decarbonizing transportation.
Transportation accounts for 33% of greenhouse gas emissions in the U.S., with light-duty vehicles, trucks and buses accounting for 70% of all U.S. transportation emissions.
Suggested actions include:
Investment in public transit and passenger rail to create a more energy-efficient transportation system.
Establishing a national network of electric vehicle charging stations.
New building-standards body 'should employ 500' (Ireland)
The Government has approved the drafting of legislation to set up a new Building Standards Regulatory Authority.
This is to improve compliance and strengthen oversight in the sector, while also enhancing public confidence in construction-related activity.
National Infrastructure Projects & Priorities
US
U.S. Creates High-Tech Global Supply Chains to Blunt Risks Tied to China
The Biden administration is attempting to transform the semiconductor supply chain.
Their aim would be to have factories making chips in the US (areas such as Texas or Arizona) and partner countries, like Costa Rica or Vietnam or Kenya assembling and sending the chips for sale.
Over three years of the Biden administration, the US has attracted $395 billion of investment in semiconductor manufacturing and $405 billion for making green technology and generating clean power.
Notes:
Chip diplomacy is a term which is rising in popularity in Washington.
The concern of rising ‘threats’ is fueling domestic investment with the administration actively targeting foreign companies to invest in the US.
While this is currently focused on chips, in the future this could be expanded to other critical technology and result in the growth of high tech manufacturing (and plant construction) in parts of the US.
For example, over the 3 years of the Biden administration, the US has attracted $395 billion of investment in semiconductor manufacturing and $405 billion for making green technology and generating clean power.
Amazon, Built by Retail, Invests in Its AI Future
The company is now investing more on data-center infrastructure than on retail warehouses.
It is planning to spend more than $100 billion over the next decade on data centers with plans to add at least 216 new data-center buildings.
Their retail capital expenditures probably won’t grow much through 2025 due to extra capacity from overbuilding during COVID.
EU
EU invests record €7 billion in sustainable, safe and smart transport infrastructure
Over 134 projects have been funded.
These projects will build or upgrade transport infrastructure to enhance railways, inland waterways, roads and short-sea shipping routes.
Some will also connect to inland or maritime ports, airports and multimodal terminals.
Notes:
The projects selected have been with the intention to make transport modes cleaner, more efficient and attractive options for passengers and freight.
Spain
Spain approves 800 million euros of subsidies for green hydrogen projects
This will go to seven projects deemed by the European Commission to be of regional value and with an overall electrolysis capacity of 652 megawatts (MW).
The projects will spur investments of more than 6 billion euros in their lifespan
They include projects in five so-called hydrogen valleys in Spain.
These are large industrial hubs that integrate green hydrogen production and its use, such as in producing fertilizers or powering refineries.
China
China's Xudapu nuclear power plant starts construction of new power unit
The unit will be the fourth to start construction and begin operation in 2029.
The total investment in the plant is $19.6b and designed to have an installed capacity of 7.6 GW.
News
Outcome-as-a-Service ⎟The playbook ingredients for startup founders in AECS (Patric Hellerman)
Outcome as a Service (OaaS) has produced $80-180B unicorns without venture funding.
Building software alongside services ensures product-market fit and builds your software with less burn.
Track record compounds in AECS, making reputation a key defensible asset
Branding as a traditional company, not a tech startup, may be advantageous for OaaS in AEC.
The State of AECS-Tech and Constru-Tech in Q2 2024 ⎟VC Funding Statistics (Foundamental)
They define the scope of AECS Tech as sectors that transform the real-world through projects:
Core construction tech
Renovation solutions such as retrofit insulation technology.
Planning and design eg. computer-aided engineering, engineering services, or even interior design.
Supply chain solutions addressing our sectors: eg. B2B marketplaces, payment solutions dedicated to construction.
AECS-Tech has had a cumulative total of $34b in funding.
This is now 0.53% of total VC funding (2x growth).
They expect we will reach $50 billion of total funding in 2026.
By Burning Down Buildings, Insurers Want to Change How They’re Built
Property insurers are trying to force changes in construction standards.
This to protect against wildfires and includes advocating for new standards for landscaping, fencing and building materials to prevent a wildfire passing through a neighborhood.
Notes:
Major insurers have stopped writing new policies and canceled some existing policies to homeowners due to the wildfire risk.
This month, State Farm asked the insurance regulator in California to approve a 30 percent rate increase for the owner-occupied home insurance it still provides in the state.
There is a precedent from 1992 after Hurricane Andrew where the insurance industry compelled homeowners and builders in the state to switch to stronger windows and roof ties.
Five Innovations Reshaping Construction (Thesis Driven)
I wrote this piece for Thesis Driven on the various factors influencing change in the industry.
It is targeted to a Real Estate audience and a paying substack (there is a free initial post subscribers can claim).
If you wish to read it, let me know.
Construction project abandonments surge
Project abandonments surged 10.7% over the past month.
Construction Adhesive Tapes Market worth $3.6 USD billion by 2028 Globally, at a CAGR of 5.7%
The Global Construction Adhesive Tapes Market is projected to grow from USD 2.7 billion in 2023 to USD 3.6 billion by 2028.
Flooring segments lead the construction adhesive tapes market.
Residential end-use industry segment to grow with highest CAGR during the forecasted period.
Asia Pacific is the largest regional market for construction adhesive tapes globally.
AI needs 'entirely new' infrastructure, says Taiwan's Chief Telecom
Traditionally 4 to 6 kilowatts (kW) of power grid capacity was sufficient for a standard data center server rack.
For AI computing, at least 10 kW is required.
Additionally a single AI server rack can weigh up to 1,500 kilograms compared with less than 1,000 for an ordinary server.
This is resulting in new infrastructure for AI data centers - even the walls needs to be redesigned for the additional load.
Amazon Says It Reached a Climate Goal Seven Years Early
Amazon said it had reached its goal of 100 percent clean energy seven years ahead of schedule.
The company said it invested billions of dollars in more than 500 solar and wind projects to achieve its target.
If I missed anything this week, please reply and let me know! I’ll make sure to include it next week.