The pandemic, to the construction industry, was like a hydra.
Employers dealt with the exacerbation of the labor shortage, myriad local and federal government policies and a bottlenecked supply chain, all of which either stalled or outright canceled projects across the country. Where one issue abated, two more rose up to take its place, it seemed.
Nevertheless, these challenges presented an opportunity for construction technology firms. Many of them say business has never been better, as contractors turned to them in greater numbers during the pandemic to streamline workflows, make jobsites safer and keep in touch with far-flung project teams.
Contech startup funding skyrocketed in 2021 to record levels, and large, publicly traded contech firms posted banner years as well.
|Autodesk||$3.27 billion||$3.79 billion||16% increase|
|Procore||$400.3 million||$514.8 million||29% increase|
|Trimble||$3.15 billion||$3.66 billion||16% increase|
Top leaders at the firms said they're bullish about the future and see more growth on the horizon.
"Importantly, the pandemic has accelerated the structural growth drivers underpinning our future growth. We have robust momentum as we enter fiscal '23 and over the long term," said Andrew Anagnost, Autodesk CEO, during the company's fourth quarter earnings call in February.
Procore CEO Tooey Courtemanche also sounded off about his company's recent successes. In response to an analyst's question about demand in the construction environment, Courtemanche admitted that certain "headwinds," such as issues with the supply chain and inflation, were making things harder, but "tailwinds" were abating these issues.
Courtemanche said the industry's recent movement toward technological change has been an important tailwind, especially as younger, more tech-savvy workers move into the industry.
"The reason I remain so highly optimistic is that these tailwinds that I keep talking about, they are not going away," Courtemanche told investors.
'A time like no other'
The boom year for contech isn't only for the giants, though. Smaller companies are also seeing measurable growth and success during the pandemic.
Construction software firm HeadLight, which helps large infrastructure contractors handle data capture, has seen large revenue gains. The Seattle-based company has seen a 334% growth in revenue over the past three years, a company spokesperson told Construction Dive in an email.
Product use is also on the rise: HeadLight reported a 110% year-over-year increase in photo and video observations captured from 2019 to 2020, according to the spokesperson, and a nearly 25% increase in observations captured during the first quarter of 2021 versus the first quarter of 2020.
The company's staff has also grown, from 25 employees two years ago to over 60 employees currently.
"It's a really exciting time to be a part of the industry," Si Katara, the co-founder and president of HeadLight, told Construction Dive.
Katara said that with the federal focus on infrastructure and high levels of resources through the Infrastructure Investment and Jobs Act, it's a "time like no other."
"That conversation is changing from 'We don't have enough resources as we had in the past' to now, 'How do we effectively use all the resources we currently have or that are coming soon?'" Katara said.
Even among startups, large funding rounds are occurring, indicating significant interest from investors looking to get into the space. Examples include construction e-commerce platform RenoRun, which hauled in $142 million in a Series B funding round led by venture capital firm Tiger Global last February, and robotics startup Diamond Age, which raised $50 million in a Series A funding round led by scientific startup firm Prime Movers Lab.
Even with the success that these firms have reported, experts predict that investment in construction technology is far from the peak. Gonzalo Galindo, the head of contech investment firm Cemex Ventures, told Construction Dive that when Cemex Ventures was started, investment was negligible. Now, he expects the coming growth to be "exponential."
"We believe that the next four or five years will be very, very big [for] the amount of money which is going to be flowing into contech," Galindo said.