Funding for construction technology startups is on the rise, with those startups raising $10 billion in investments from 2011 through early 2017, according to McKinsey & Company.
Most of that technology focuses on the construction phase, including enterprise resource planning (ERP) systems and document management tools. While roughly 1,000 companies were found to make products for construction, less than 200 developed solutions for design, preconstruction or operations.
Investment activity is concentrated on field productivity and performance management, which McKinsey previously found in need of improvement. The latest report notes that engineering and construction companies can use new technology to catch up to productivity gains in other industries, yielding a $1.6 trillion boost in yearly output.
With today's construction activity at 2007 levels and with 100,000 fewer skilled workers industry-wide, more construction teams on and off the job site are turning to technology for productivity solutions. Telematics is one solution that is gaining steam in the industry, with major companies like Komatsu, Caterpillar and John Deere making investments in such technology.
For example, Chicago-based construction equipment telematics firm Uptake partnered with Caterpillar earlier this year to gather and analyze site data for tasks like fleet maintenance and workflow logistics.
Investment in project management tools is also on the rise. Startups like PlanGrid, Fieldwire, Aproplan and Procore are capturing investors' attention as they respond to demand for digital options to manage workflow on the job.
Other companies, particularly in the offsite construction segment, are gaining attention for re-thinking the construction process from the ground up. Startups like Katerra, which offers turnkey modular construction services for the multifamily sector, are expanding their foothold in the industry as companies look for ways to maintain project schedules and speed up the construction process with fewer resources. FullStack Modular, the prefab builder behind the 32-story, 363-unit 461 Dean tower in Brooklyn, NY, is building momentum. The company raised $6 million in Series A funding in June, with plans to use that money to expand operations.
An industry-wide push to improve performance on the job site is pushing other investors to grow their stake in artificial intelligence and machine learning. Earlier this month, Cambridge, MA–based construction software startup Smartvid.io raised $7 million in Series A funding from backers including Autodesk and Borealis Ventures. The investment gives Smartvid.io the chance to sharpen its image-recognition software through access to Autodesk's construction image files — a move that could lead to more machine-learning on the job site.