Construction tech is one of those sectors that has not historically been considered “sexy” in a startup world that often favors glitzier technology. But construction fuels the commercial and real estate industries, which in turn impacts all of us in one way or another.
Historically, the industry has been reluctant to embrace technology, but as there have been generational shifts in leadership, that has slowly changed.
Procore and Autodesk are two examples of ventures in the construction space that went from startup to publicly traded companies today worth $6.2 billion and $40.5 billion, respectively. But beyond those two companies, there are scores of others eager to break into the industry.
To help them along, one construction tech-focused venture capital firm is eager to fund a new generation of startups in the space. Brick & Mortar Ventures, headed by Darren Bechtel of the Bechtel family, is teaming up with BuiltWorlds, which describes itself as a network of buildings and infrastructure professionals, to launch an early-stage accelerator program called Formwork Labs.
Put simply, the group aims for the program to become the “YC of construction tech,” said Bechtel.
“Fixing a foundation after the superstructure is built is a costly, disruptive and sometimes impossible task,” Bechtel said. “Our goal with Formwork Labs is to help the best and brightest construction tech founders get started on the right foot, set up for success and in front of the right investors, partners and early customers.”
For starters, Formwork Labs will select five pre-seed companies to participate as a cohort in its immersive, 10-week startup accelerator program. During the program, industry “experts” and past founders in the Architecture, Engineering and Construction (AEC) space will provide participants with “strategic guidance” on product and go-to-market strategy, “while preparing the company for success and future financing from top-tier venture capital firms,” say the organizers.
“It’ll actually be a pretty hard decision for that first cohort, but we're hoping to encourage entrepreneurs from outside of the construction industry to participate as well,” said Jack Forde, a VP at BuiltWorlds.
Each startup company will also receive $75,000 in funding on a post-money SAFE “to spend at their discretion” in return for 5% of the company.
Notably, Bechtel said Brick & Mortar Ventures is not allowed to lead a funding round within six months of program completion. But the firm will commit to investing up to 25% of the next round of qualified funding.
“The companies will be evaluated by the same standards and lens as an investment from Brick & Mortar Ventures,” said Alice Leung, the firm's vice president of platform and product strategy. “We won’t be as strict around customer feedback, but we’ll want access to customer feedback and pilot projects.”
“We hear from early-stage companies that they want access to customer feedback. They want access to pilot projects,” she told TechCrunch. “So a big portion of the Formwork Labs program is going to provide these entrepreneurs with access.”
The accelerator will culminate with a Demo Day during BuiltWorlds’ 2022 America’s Summit in September 2022, where program participants will present their products to “investors and innovators in the construction industry.” Founders can apply to the program here.
Matthew Gray, executive chairman of BuiltWorlds, said there are still “many, many areas” within the tech stack and across the tech stack where the industry still has pain points and where “they don’t have solutions that they're happy with, or they don't have solutions at all.”
“So that suggests for somebody who's thinking about maybe an opportunity in this sector, there's still an awful lot of whitespace,” he told TechCrunch.
Bechtel agrees, noting that Brick & Mortar often comes across companies that are too early stage for his firm to back.
“We comb the desert around the world, seeing great investment opportunities, but access to venture dollars is really difficult for outside U.S. investors,” he said. “So we’re providing a forum where we can bring some of the people working on big problems that have some good initial ideas from a product and solution standpoint in front of a group of investors that have already expressed interest in the emerging construction technology sector.”
Bechtel individually and Brick & Mortar combined have invested in 40 construction-related tech startups over the past 10 years, beginning with Bechtel's 2012 investment into PlanGrid’s seed round of funding. They have since had 12 exits, including PlanGrid, Levelset, Fieldwire and BuildingConnected — believed to be among the largest M&A exits of venture-backed construction software startups in history. Brick & Mortar Venture's first fund totaled $97.2 million in committed capital with backing from 12 construction-related companies. In 2021, the firm filed a disclosure that it was seeking to raise $150 million in new capital.
Earlier this year, in a similar arrangement, Omers Ventures teamed up with Turner Construction to create an entrepreneur-in-residence program that would serve as an incubator for founders to prepare them to launch their new construction tech software companies.