Contech saw more deals, fewer dollars last year

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Dive Brief:

• Investors pumped fewer dollars into the contech ecosystem last year, investing $14.9 billion into the space, a 22% decrease compared to the $19.2 billion seen in 2023, according to BuiltWorlds’ Annual Venture & Investment Report released this month. 
• However, VC firms and startups completed more deals in 2024 — 604 compared to 558 in 2023. Chicago-based contech network BuiltWorlds attributed 2023’s higher dollar amounts to five deals that were at or exceeding $1 billion in value, per the post.
• That relatively robust appetite for more deals from built environment venture capital, BuiltWorlds said, is underpinned by macro factors such as U.S. construction spending being at an all-time high, driven by the Infrastructure Investment and Jobs Act, alongside the Inflation Reduction Act, and increasing European construction output, according to Eurostat, the European Union’s statistical office.

Dive Insight:

The investment market’s flurry of deals also comes amid a global VC climate that’s been hampered by high interest rates and suppressed exit activity, according to BuiltWorlds. However, current results show that AEC investment may be breaking free from those broader influences.

“It is possible that for the first time since 2019, investment decisions were not significantly driven in some way by macroeconomic impacts,” said Tyler Sewall, BuiltWorlds senior director of research, in a Feb. 25 news release shared with Construction Dive. “2020-2022 investment activity was influenced heavily by a remote workforce and digital community, and following that the domestic public infrastructure funding colored VC activity.

One country that saw a significant drop was the U.K., where activity fell 86% year over year as local investors face significant headwinds. The report noted that VC funding in the area remained high relative to the rest of the world, however.

BuiltWorlds divided the VC firms into three categories:

• Construction technology: Software solutions, tools, equipment and robotics that are used by the back office and the field in project execution. Examples of these solutions include project management software and advanced tools, equipment and robotics used on the jobsite.
• Building technology: Hardware and software connected to the asset itself. Examples of this tech include high-performance materials, planning and design solutions and property technology, such as commercial software that facilitates property management, renovation management and transaction management.
• Infrastructure technology: Project software, tools, equipment, robotics, energy storage and utilities management solutions involved in the horizontal construction process or grid-scale energy transition.

The construction technology category saw more money year over year — $2.3 billion in 2024 from $1.7 billion in 2023, representing an increase of 32.9%. However, it saw less deal activity in 2024 — 137 construction tech VC funding rounds were reported, compared to 145 in 2023.

By contrast, less money entered the building and infrastructure sectors YOY, while both categories saw more deals. Infrastructure tech buoyed a majority of the growth due to interest in energy infrastructure and an influx in government funding, per BuiltWorlds.

In addition, BuiltWorlds called out merger and acquisition activity — 88 built environment tech M&A deals were completed in the last year, largely driven by increased competition between private equity-backed rollup plays and strategic tuck-in acquisitions, the firm said.

The report echoes similar statistics put forward by Cemex Ventures, the contech-focused venture capital arm of Monterrey, Mexico-based building materials firm Cemex, in its recent annual report. It noted that certain segments declined in funding, such as those that dealt with robotics, supply chain logistics and environmental tech, while artificial intelligence stood out as a clear winner.