Where top VCs are investing in construction robotics

Venture capital has been flooding the various subverticals under the robotics umbrella in recent years, and the construction space is one of the largest beneficiaries.

Last November, we surveyed 13 of the top robotics-focused VCs to find out which areas of robotics are exciting them most going into 2020. One of the most common areas of attention respondents highlighted were startups focused on construction and manufacturing. In 2019 alone, the robotics space saw roughly 600 venture-backed fundraising rounds, while construction companies successfully raised roughly 200 venture rounds.

With our 2020 Robotics + AI sessions event on the horizon in early March, we’re diving back into the sector to learn about the attributes of construction attracting robotics VCs the most and which types of startups VCs are actually writing checks for in 2020. We asked 16 leading people who actively invest in construction robotics and work at firms spanning early to growth-stage to share what’s exciting them most and where they see opportunity in the sector:

Rohit Sharma, True Ventures

True Ventures has been investing in industrial automation broadly for over 4 years, focusing on founders who bring technology to market that eliminates repetitive manual labor and multiplies human productivity by automating routine tasks.

The construction industry continues to be full of possibilities for finding better ways to work, from optimal utilization of land and urban areas driven by design solutions, to physical construction activity across the lifetime of the buildings themselves. Some of the opportunities involve machines, while an equal amount of opportunity lies in the software behind the machines. We are early in automating surveying, planning, marking and completing basic construction tasks using robots of various kinds.

And we are at the concept stages of combining this activity with continuous lifetime monitoring and active operations of a building once completed. These changes will create opportunities for founders across the entire stack of computer-aided design tools for architects, Geographic Information Systems (GIS), Building Information Modeling (BIM) tools, and finally integration with 3-D environmental models to understand and design the lifetime impact of the buildings.

Specifically within robotics, we are inspired by portfolio founders like Chris Anderson of 3DR (3D Robotics), a pioneer in site-scanning tools with UAVs and founders we’ve learned from though didn’t get a chance to fund, including Tessa Lau of Dusty Robotics, which has a great solution for marking and layouts, and Jeremy Conrad of Quartz, which is using camera and vision systems to automate operation at construction sites.

Matt Murphy and Grace Ge, Menlo Ventures

Which trends are you most excited about in construction robotics from an investing perspective?

At a high level, we’re interested in construction robotics because the industry has a litany of manual, hazardous and back-breaking jobs and on top of that is facing a labor crunch. Many of these jobs can be augmented and dramatically improved via automation and robotics.

The major trends driving automation in the construction industry are a shortage of labor, aging out of the workforce, tech-native workers ready to embrace technology, the promise of huge efficiency gains and finally, advances in robotics and AI which makes the technology more possible and economic in uncontrolled environments. Some of the primary areas in construction where robotics are poised to impact the industry are site prep, masonry, drywall and finishing.

In addition, robotics has already had a huge impact on the prefab market where the process is set up very much like a factory versus the variability of individual sites. That will be overcome as robotics and especially their AI models (autonomous operations or predictable patterns) advance such that robots can co-exist with humans on most job sites. 

How much time are you spending on construction robotics right now? Is the market under-heated, overheated or just right?

About 10 percent of our time. We are active in construction with investments such as HOVER and Fieldwire and believe the entire sector is right for a digital and automation overhaul.

Are there startups that you wish you would see in the industry but don’t?

There is a strong amount of activity in the sector right now, but all are early in the adoption cycle. The main thing is getting construction companies and contractors to accelerate their adoption of the tech and the labor shortage issue is putting substantial pressure on them to act.

Something in both the masonry and bricklayer arena as well as framing would be interesting. Finishing is the ripest for disruption.

Any other thoughts you want to share with TechCrunch readers?

Here is some work we did on the construction market and why it’s interesting:

While the construction industry has traditionally been slow to adopt new technologies, this is quickly changing as the industry is suffering productivity pains that are impeding both its execution ability and bottom line. Robotics that have the ability to automate and bring productivity to this vertical are attractive for the following reasons:

1. Labor shortage/understaffed:

  • The labor shortage in construction is a rapidly growing problem that isn’t going away. As of February 2017, nearly 200,000 construction jobs were left unfilled across the U.S., according to the Bureau of Labor Statistics (Recode). As of April 2019, there are 434,000 vacant construction jobs (Forbes).
  • From 2007 to 2011, during which the Great Recession of 2008-09 took place, the construction industry lost approximately 2 million workers. Many of these workers haven’t returned and companies are finding it difficult to attract new talent (Giatec Scientific Inc.).
  • 80 percent of construction firms are having trouble hiring craft workers (Associated General Contractors of America from August 2018).
  • Today, workers avoid construction jobs, perceiving them as dangerous, difficult, and dirty (Forbes). Only 1.8 percent of the industry’s workers are between 16 and 19 years old, while fewer than 9.4 percent are younger than 25. (USA News).
  • Labor also is the biggest bucket of cost in construction.

2. Low digitization/adoption of technology impeding productivity:

  • R&D spending in construction runs well behind that of other industries: less than 1 percent of revenues, versus 3.5-4.5 percent for the auto and aerospace sectors (McKinsey & Co.).
  • Image via McKinsey Global Institute (McKisney & Co)

  • Construction labor productivity has not kept pace with overall economic productivity. Since 1945, productivity in manufacturing, retail and agriculture has grown 1,500 percent, while it has barely gone up in construction (McKinsey & Co.).
  • Image via McKinsey Global Institute (McKinsey & Co) via Organisation for Economic Co-operation and Development

3. Cost and schedule overruns are normal:

  • 98 percent of mega-projects suffer cost overruns of more than 30 percent; 77 percent are at least 40 percent late; average slippage is 20 months behind schedule; average cost increase is 80 percent of original value (Mckinsey & Co).
  • And in a multi-trillion-dollar global industry like construction, even the slightest uptick in efficiency could amount to hundreds of millions savings (Recode).

4. Of the sub-verticals in construction that tend to cost the most (structural support like concrete and steel or mechanical and plumbing), not many can be automated because of the complexity of the task. Some verticals that proportionally cost less but still incur significant costs and are deployed across asset types, like drywall and bricklaying, are appealing (Forbes).

  • Image Via Juliette Cilia (Columbia Business School)

5. Lack of funding to address labor shortage: VCs poured $3.1 billion into construction tech in 2018. Most of this money went towards modular housing companies or software that promises to optimize current processes such as project management and communication. Yet neither of these buckets addresses the labor shortage head-on (Forbes).

Travis Connors, Building Ventures

At Building Ventures, we see enormous opportunities developing for the use of robotics in construction over the next 20 years. This is driven by two competing but incredibly important trends.

To accommodate the rapid urbanization we are experiencing we need to build over 13,000 buildings every day. And yet, recent surveys show that 66 percent of construction markets globally are suffering from a shortage of labor skills.

Compounding this is the fact that only 3 percent of the construction labor force is Millennial while over 20 percent is approaching retirement. Robotics and automation are not only important, but they are also likely the only way to address the challenge of delivering the built environment we need by 2040.

But construction sites are very challenging environments and many of the approaches we have seen to date are immature because they focus too much on the robotics and not enough on the problems. For example, it is still much more efficient for a human to navigate a job site than a robot or a drone, regardless of the “job” trying to be done.

Two notable exceptions are Built Robotics (Building Ventures portfolio company) which is already a proven solution in the field for leading construction firms including Mortenson, and Blokable (Building Ventures portfolio company) which is harnessing robotics and automation in their “factory” to optimize the speed and efficiency of creating affordable housing units at scale.

At Building Ventures, we are looking to partner with founders who can best take advantage of the robotic capabilities available today (and tomorrow) to create business models that solve the construction industry’s critical pain points.

These will be the winners in the space. It’s not about the robots but the solutions they provide, saving time, labor and money on a job site. We are still in the early days of construction robotics but this is a space with huge potential and promise and one we are watching closely.

Saman Farid, Baidu Ventures

We’re interested in construction robotics because as AI has developed, and tools like computer vision have matured, robotics have evolved the capability to work in highly complex, dynamic environments. The world of manufacturing has adopted robotics long ago and benefited from the relatively standard processes that they did on-repeat. Because each construction project looks different, standard rule-following robots would not be able to function on-site.

Over the last few years, we’ve seen many entrepreneurs begin to tackle challenges in the construction world using robotics and AI, ranging from data-collection to completion of actual construction tasks like electrical wiring, drywall installation, concrete pouring, pad leveling and much more. AI has also begun to play a bigger role in the construction supply chain, production scheduling, labor management, insurance and financing, risk assessment etc.

As construction is traditionally a low-productivity exercise, these efficiency improvements are generally quite welcome, however we see adoption of robotics and AI in construction happening much more rapidly outside of the US, as there are less entrenched interests and flexibility in construction standards.

Overall, we are very optimistic about construction robotics and hope to see more companies attempt to solve the issues in productivity with breakthrough technologies, as well as innovative business models.

Aaron Jacobson, NEA

Which trends are you most excited about in construction robotics from an investing perspective?

A key trend I’m watching in construction robotics is the rise of prefab and modular construction. Rather than starting each building from scratch, work is shifted into an assembly plant which leverages a high degree of automation to lower costs, minimize mistakes, increase safety and accelerate project timelines.

More automated solutions for home-building will be critical to solve the growing housing crisis, especially in cities. According to UN forecasts, the number of people living in cities is expected to double by 2050, growing from 3.5 billion today to more than 7 billion.

I’m also intrigued by robots pursuing the monotonous, painstaking tasks foundational to construction. These robots deliver value quickly with a clear, measurable ROI for customers. Excavation robots are a prime example and we’re seeing companies like Built Robotics gain a lot of traction. There are numerous other opportunities and applications, with startups targeting drywalling, drilling, bricklaying, rebar placement and rebar tying. I’m excited to watch this space evolve.

Any other thoughts you want to share with TechCrunch readers?

Despite my enthusiasm for construction robotics, it’s important to keep in mind the industry’s hesitance to embrace new technology. According to McKinsey research, construction productivity has been flat for decades, while manufacturing productivity has nearly doubled over the same period.

A shortage of labor combined with the complexity, cost, degree of customization, and sheer volume of construction projects is driving a breaking point that will usher in a new wave of technology, but it’s not going to happen overnight. Current interest has been focused on standardizing, digitizing and measuring existing workflows via software — leading to successes like PlanGrid and Procore.

Automating repeatable physical tasks via robotics is the next low-hanging fruit, but we are still in the early adopter phase. Startups are going to need to be patient with customers and careful not to run out of money before we see construction robotics cross the chasm.

Shaun Abrahamson, Urban Us

Our goal for the Urban Us portfolio is to play a major role in getting the world’s largest cities to zero emissions, while also reducing climate-related risk by a factor of 10 for people and assets. For Urban Us, this means re-imagining all aspects of how we design, build, operate and maintain the built environment.

About 25% of our portfolio and roughly the same amount of our time is related to construction, which includes some combination of hardware, robotics, machine learning and new materials. We have noticed that many interesting opportunities in this space require hardware.

Nearly two years ago, we set up our first credit fund to provide products like asset and project finance and built out financial tools focused [on] asset-enabled businesses. We have also staffed our URBAN-X accelerator program with dedicated experts to provide software and hardware support.

We are interested in the full lifecycle of construction, but the design phase offers a lot of opportunities to improve performance, introduce new products, processes and reduce costs, so we will continue to look at tools that simulate as much as possible in bits before the more expensive processes of moving atoms. We have recently made investments in firms like Cove Tool, One Concern and Firmus.

During construction, we see opportunities to augment human performance, improve training and in some cases, completely automate dangerous, slow or expensive processes to move closer to the types of productivity found in manufacturing. This has led us to investments in Skycatch, Versatile, Buildstream and Avvir.

In the coming years, we expect to see a big push to automate instrumentation, maintenance and inspection of the built environment to improve the lifetime value of assets by better understanding how they are used, how they are maintained and how they interact with natural hazards and climate variability. As more investors look to own and operate large pieces of infrastructure from roads to flood management systems, this area becomes more interesting. Investments in this theme include Roadbotics and Hades.

We expect physical infrastructure to become much larger, driven by climate adaptation and mitigation. For example, infrastructure needed for community-scale flood mitigation or sea walls, but also much smaller and more modular infrastructure such as temporary protected bike lanes or mobile housing. Our investments related to large infrastructure and modularity include Blokable and Toggle.

We’d like to meet teams working across all of the above themes. At the same time, in many cases we expect founders will introduce us to opportunities we’ve overlooked.

Atin Batra, Twenty Seven Ventures

I spend a quarter of my time on robotics — researching the space, meeting relevant people, evaluating companies. Within robotics, we tend to gravitate towards companies bringing automation to traditional industries, especially construction and manufacturing.

The construction industry, in particular, has been largely untouched by technology — primarily because of significant barriers to adoption: stakeholders’ resistance to change, cost to deploy and the requisite effort. However, with a recession looming and ongoing skilled labor shortages, industry executives are beginning to appreciate the positive effect automation has on their bottom line.

Two technologies that we see a lot of construction robotics companies build upon and I believe are finally at an inflection point are cobots — collaborative robots that work alongside humans on the construction site — and autonomous vehicles that can take over the menial tasks of moving materials around a site.

The one trend that only a handful of construction startups adopt is the use and application of computer-aided generative design. I recently met a team that leveraged generative design to create thermally efficient concrete facade panels (that are 3D printed, to boot) and was completely blown away by the results the environmentally-conscious team had achieved. We’d love to see more startups make use of the advanced design tools we now have access to.

Finally, I’ll add that reports of robots replacing humans on construction sites in the near future are wildly overblown. Much like self-driving cars are 15-20 years away (as against the initially predicted 2-5 years), the day when humans are no longer needed on a building site is at least one, if not two, decade(s) away.

Our portfolio company Toggle Industries is a prime example — while their automation tech helps humans avoid the dangerous parts of the rebar assembly job, they still play a crucial role in the assembly process, working alongside the robots.

Andrew Ackerman, Dreamit Ventures

Dreamit has been actively investing in proptech and contech for the past three years and we are seeing consistent, broad and intense interest in construction robotics across our customer partner network.

General contractors are actively seeking out — and signing paid pilots with — solutions ranging from excavation to surveying and marking, rebar cage assembly, scaffolding with robotic material handling, bricklaying (slightly overhyped, IMHO), framing, painting and everything in between. So if you are a contech robotics startup looking for pilots, this is about as favorable an environment as you could ask for.

Driving this broad interest is the shortage of skilled trades and its impact on cost, quality, and, perhaps most importantly, project schedule. Robots aren’t expected to be 100% of the solution; there will always be narrow nooks that the painting machine cannot reach and large cages where humans need to work with the robot to assemble. But as long as the robotic solution can replace a meaningful proportion of the labor and consistently match or beat schedule and reliability, that’s enough for the customer.

One wrinkle to robotics in construction is the GC-subcontractor relationship. Everyone in a manufacturing plant is employed by the plant owner. On a construction site, 80%+ of the people do not work for the GC. Most of the functions amenable to robotics are actually performed by subs so, while the pilots are currently paid for by the GCs, it’s unclear, both to investors and even to the GCs themselves, whether they will be the ultimate customers (viz., buy/lease the robot so they can self-perform that function) or whether they are simply paying to learn.

So what we generally see is that the startup goes to market as the sub. They replace the current framing sub with their robot and crew. The GC continues to pay them the very same way that they currently pay their current subs.

In the long term, the startup can transition to selling or leasing the machine to the GC (if they take it in-house) or to the subs (so they can win more GC bids) or it may opt to build a large subcontracting business, keeping the robotic solution to itself as its critical competitive advantage. My best current hypothesis is that different trades will be better fits to different business models and even that in some trades, multiple different models will persist in parallel.

Bottom line: It’s a good time to be a robotics startup in the construction sector but expect that customers and investors are generally in the ‘still just figuring it out’ stage so be ready to bring well-thought-out proposals to the table (a.k.a. don’t make them think) but stay flexible at the same time.

Ben Bayat, NextGen Venture Partners

Which trends are you most excited about in construction robotics from an investing perspective?

We’re bullish on what the adoption of BIM [building information modeling] in the development phase means for the next decade of construction in the field. The Holy Grail in construction is to accurately and efficiently translate the BIM model to the field, augmenting human capability while removing subjective interpretation, version control issues and other factors contributing to high rework costs and schedule delays.

NextGen’s latest investment in Dusty Robotics is an illustration of this trend in action — by using robotic automation to synchronize the BIM model and the reality in the field, Dusty enables onsite crews to work more effectively to deliver a faster, high quality and safer overall building process.

How much time are you spending on construction robotics right now? Is the market under-heated, overheated or just right?

Roughly a fifth of our deal flow is related to construction tech, of which robotics is a rapidly increasing category. Based on the market size and customer demand for new technologies, we feel construction robotics is ready for adoption and as a result is under-heated from an investment standpoint.

Are there startups that you wish you would see in the industry but don’t?

On site pre-fab capabilities is an area of focus we’re excited to see develop further. When looking at the three most important elements of construction (labor, material and process) on site pre-fab can reimagine the materials and labor interaction that has dictated why components have been they way they’ve been.

Any other thoughts you want to share with TechCrunch readers?

An important framing of our view on construction robotics is that it’s not about replacing labor, that’s a commodity capability. The best construction robotics companies will consider labor, material and process.

Duncan Turner, SOSV & HAX

The construction industry suffers from an immense productivity challenge when compared to other sectors like manufacturing; it is a perfect problem for robots to address. Construction environments are complex, often not to plan and unpredictable. Each structure is a one-off, so efficiencies through repeatability and division of processes are the challenges where construction robots can make a real difference in the following ways.

  • Bespoke pre-fabrication

Pre-fabrication is not new by any means in the construction industry but was limited in customization. Open-source code and resources are enabling large-scale 3D printing, robotic welding and machining to be developed by startups for the construction space in record time. A great example is a company we invested in (www.rebartek.com) who pre-fabricate rebar cages rather than manually creating them on site.

  • Digital twinning and project management

One of the biggest challenges in the industry is delays down to discrepancies between the digital plan and the real world. Coordinating different subcontractors or inevitable deviations in the building execution impacts timelines.

Robots and drones can play an important role here in continuously updating the Building Information Model with up-to-date data to help plan, monitor and modify. This has been aided by advancements in 3D vision technology to make low density, cost-effective modeling possible without the need for experienced civil engineers and traditional “total station” solutions.

  • Complementing the labor force

There are so many repetitive tasks on sites that can be automated. We have seen some incredibly sophisticated robots to replace humans in the construction space. It is inspiring to watch from a technical perspective, but we would be concerned about real-life variability.

We are most excited about robotic tools that look to improve individual worker productivity rather than replace it. One of our startups (shapemeasure.com) combines low-cost lidar and CNC cutting innovation to create a sophisticated measuring tool which outputs vectors rather than dimensions which can be ported straight into a small job-site CNC.

We watch the construction market avidly. Innovative new startups are continually entering the space. There is a lot of hype about 5G for robotics. But, because construction generally takes place in an urban environment, this is one solid use case we can see for this enabling technology to facilitate low-latency remote or cloud control.

Companies augmenting existing machinery for autonomy like www.builtrobotics.com will do well with 5G deployment. Due to the enormous size and complexity of the construction industry, we don’t see single companies dominating a sector. There are substantial regional variations in building materials, regulations, requirements and employment challenges.

We, therefore, think that it is a little under-heated as automation plays such an important role. As international investors, we see this as a critical area for continued growth.

We think about robots as more than just the construction process. They should be an integral part of the building’s complete lifecycle; we’d love to see more innovative solutions in this space. Robots should be planned into the design phase to maintain the infrastructure of the building and even play a role in the deconstruction at the end of its life to recycle material.

Another exciting area we have not seen much activity in is robotics for renovation to improve energy efficiency. With cars, it is almost always better to replace an old car with a new one despite the manufacturing burden as there are such significant gains in energy saving.

Buildings are the same, however often historically and culturally significant and therefore protected. It is incredibly expensive to modify them to increase energy efficiency. Consequently, we could see robots playing a role here.

Zach Aarons, MetaProp VC

Which trends are you most excited about in construction robotics from an investing perspective?

One of the main issues to date with the lack of proliferation of robotics in the construction industry is the challenge of having so much variety on a construction site. The job site is a very idiosyncratic place where things often happen not according to plan.

Therefore, our investment thesis focuses on tasks that are simple and easily replicated. These categories include autonomous grading vehicles, robots that can lay bricks and robots that can accurately measure interior and exterior space.

How much time are you spending on construction robotics right now? Is the market under-heated, overheated or just right?

We are not spending much time on it because we are still mostly focused on construction software. There are so many different categories of software products that still need to get built in the construction industry, so we spend at least 70% of our time in the construction sector on SaaS, software marketplaces and some SaaS that has a small hardware or lidar component. 30% of our efforts or less are spent on robotics, 3D printing, and modular construction.

Are there startups that you wish you would see in the industry but don’t?

I have yet to see a company that treats robotic workers on the job site like a video game. The bulk of the robots I have seen are autonomous and “supervised” by humans on the job site.

One of my visions is to have a gigantic control room in some underground bunker that’s simultaneously controlling thousands of robots around the world on construction sites. We haven’t seen that company yet…

Any other thoughts you want to share with TechCrunch readers?

When it comes to construction robotics, we are so early in the innovation cycle, that it’s not even the first inning of the ball game. We are still tailgating in the parking lot.

Niki Pezeshki, Felicis Ventures

Construction is one of the few industries that hasn’t seen significant productivity increases in the last few decades. There are many things holding it back, including 1) fragmentation of labor with multiple different stakeholders working on one project, which creates bottlenecks and broken communication, 2) stringent safety regulations and oversight (probably a very good thing, as it’s a dangerous job), and 3) complexity of projects have increased over time (larger buildings, new types of architecture, etc.).

Distribution for technology vendors has also been hard because each construction site is basically a new sale, there are multiple different entities to sell to within each project (can be tough to navigate who is the right buyer and figuring out what the incentive is to adopt the new technology) and there hasn’t been as much of an appetite towards innovative technology because the old way has been “good enough.”

Finally, the construction industry is cyclical, so unless a technology company has significant cash reserves or is founded at the right time in the cycle, they may see a big drop in demand at some point during their growth phase and have to decrease spending on R&D and growth.

While there are challenges, it’s certainly a market that has a lot of potential, especially as labor continues to be tight, housing prices keep pushing up and developers are pressured to finish buildings faster.

We have made at least a couple of investments in the construction robotics space. We are investors in Quartz Robotics, which places video cameras on cranes that enable operators to identify, track, and understand everything that moves on the construction site. We also are investors in a stealth construction company that uses robots to build modular multi-family buildings. We’ve also looked at multiple other innovative companies in the space like Doxel, Openspace and many others — they are all doing impressive work.

We continue to look for unique applications of existing technologies that can drive productivity at construction sites and a clear ROI for developers. A very important factor for me is a distribution model that can lead to more velocity instead of lumpy sales, as higher sales velocity implies a deep need/pull by the market, while it’s hard to forecast continued growth if sales are one-time and not predictable.

Avidan Ross, Root Ventures

Which trends are you most excited about in construction robotics from an investing perspective?

The most exciting trend in construction robotics is purpose-built devices to tackle specific subcontractor trades: we have seen grading (Built), rebar caging (Toggle), layout painting (Dusty), and drywall hanging (Canvas) done entirely by robots and it feels like we’re just beginning.

These robots are now possible due to the peace dividends of the autonomous car wars, which have driven down sensor costs and increased the availability of compute infrastructure. As a result, rapid progress has been made in navigating unstructured and chaotic environments.

In addition, significant investments in robotic manipulation by companies like Tesla and Amazon have led to advances in both technology and a larger founder pool. From the industry side, the ongoing adoption of digital systems such as Building Information Modeling (BIM) during the design and construction phase makes it easier to integrate automation.

While companies like Katerra and Blu Homes are moving towards centralized prefab manufacturing of panelized systems, we believe the not-so-distant future of construction involves smaller robots capable of subsystem construction with “at the edge” manufacture. Why pay the logistics premium to deliver a fully panelized system when you can deliver raw materials and allow robots to assemble 24/7?

How much time are you spending on construction robotics right now?

Nearly a fifth of our investments in our most recent fund are construction-related, and we are actively looking for more opportunities. Before starting Root Ventures, I was the CTO of an investment firm with nearly $30B in commercial real estate and construction projects, so I have seen the inefficiencies (and consequently opportunities!) up close.

Is the market under-heated, overheated or just right?

Under-heated. Construction is an industry that has been unable to adopt digital transformation due to its unstructured and disconnected nature. Tech companies of the last few decades have largely focused on industries that can easily be networked and analyzed as a bit-stream (media, finance, etc).

With the proliferation of sensors and manipulators, the construction industry is just beginning to see opportunities for automation. Compounding this is one of the toughest skilled labor shortages the industry has ever seen. The construction industry is finally transforming their view from technology as a cost center to a competitive differentiator — this is something the smarter general contractors are actively adopting as initiatives. Smartphones and tablets on the job sites gave contractors a first glimpse of how technology can drive returns and we believe it’s about to get a lot more exciting.

Are there startups that you wish you would see in the industry but don’t?

We would love to see more software automation in design and BIM modeling. Currently, only the most sophisticated contractors are utilizing BIM. The BIM model provides the ideal foundation for automation to start executing upon.

In addition, we believe there is a huge opportunity to utilize computational techniques such as machine learning to produce optimal architectural designs and construction plans: generative design software can integrate diverse requirements such as building utilization models, energy models, local costs of construction and materials, and more to rapidly converge on optimal designs.

Our vision for the future of construction is an algorithmically generated DFRC building (designed for robotic construction), fully built by automated systems with minimal human tending.

Kia Nejatian and Miles Tabibian, Plug & Play

Given the construction industry is quite antiquated and will account for $15.5T annual spend globally by 2030, we spend a lot of time studying the space finding opportunities that are solving some of the biggest pain points that are hindering the industry. This is a low-margin industry and, historically, has lacked investment in research and development. This is starting to change.

GC’s around the globe have started spending millions on innovation knowing if they don’t act on some of these pain points, like increasing labor costs, they will drive their companies into the ground. This is an indication that the industry is ready for disruption.

The rise of offsite construction: Over the past few years there has been an increase in investments in offsite construction. Almost 40% of low-rise office buildings globally incorporate modular constructed elements. And although the residential sector has been slow to adopt offsite construction, the industry will continue to grow by roughly 7% per year and hit $157B by 2023. This is primarily driven by the lack of skilled labor and affordable and growing material costs.

The rising demand for new affordable housing and increased investment in infrastructure sector are the couple other market drivers in the industry. Read more about this topic in this piece we wrote on the history of prefab construction and how it’s going to help the U.S. address its affordable housing crisis.

Automation in onsite construction: Similar to prefab construction, robotics and automation are solving the industry’s biggest pain points — labor shortage and subpar productivity. We expect to see 7,000 robots by 2025 on construction sites automating and augmenting tasks like field layout, bricklaying and drywall installation.

By automating tedious and manual labor-intensive tasks, contractors are able to deliver projects faster and more efficiently, while offsetting the loss of skilled laborers the industry is facing globally. And although it will still take some time before we see technology and automation completely takeover job sites, we’re excited to see traction.

Although plenty of entrepreneurs have built solutions addressing the most basic issues construction companies are facing today, the industry has been slow to adopt. Few AEC firms are actually re-thinking their innovation strategies to gain competitive edge, or even simply survive. Although research indicates that the industry is positioned to be disrupted, most construction companies aren’t structured properly to innovate or don’t want to risk being the first the first adopters.