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Why Built World Startups Are Securing VC Cash

2024-12-09

We often overlook the built-world industry as a hotbed of technological innovation. Peering through the fencing of a construction site, one might be surprised to find that the scene has remained relatively unchanged for decades. Heavy machinery, workers in high-vis jackets, and good old-fashioned mud still dominate. Major construction companies lead the projects, supported by numerous subcontractors. On the surface, it seems there's little room for ambitious tech startups.

Discover the Hidden Tech Potential in the Built World

Global Figures and UK's Standing

According to global figures from European venture capital firm NOA, startups in the "built world" sector are set to secure $24 billion in investment this year, with $21.1 billion already raised. In the UK, built-world companies have raised $1.2 billion so far, with London leading in deal volume. This shows that there is indeed potential for growth and innovation in this seemingly traditional industry.

The Importance of the Sector

As NOA founder Gregory Dewerpe emphasizes, everyone on the planet is affected by the built-world sector in various ways. Financially, physically, psychologically, or otherwise. It's not just about buildings; it's about the energy that goes into them and how to decarbonize it. Resource efficiency is also crucial, such as dealing with the end-of-life of building assets like batteries and solar panels.

Sector Overlap and Investment Trends

There is a significant crossover between startups in the built world and those in other segments like climate. Decarbonization is a major theme, with an 10% increase in investment in electrification technologies driven by smart grid technology. Robotics, too, has seen an increase in investment, with a 61% rise in industrial automation funding and an 890% jump in capital for building operations robotics.

New Technological Capabilities

There are fascinating advancements in robotics and AI. Robots are becoming smarter and more user-friendly. The emergence of 5G is also creating a technology infrastructure that makes building and scaling easier. Additionally, it can make hardware development cheaper while still maintaining an asset-light business model.

Must-Have Technologies for the Industry

NOA is looking for startups that offer "must-have" solutions to the industry. These are solutions that deliver a clear return on investment (ROI) for the end user, whether it's in operational efficiency, financial efficiency, or system capability improvement. If a startup can provide one of these, there will be a budget and a willingness to adopt.

Real-World Examples

Marius Westhoff, co-founder of Smalt, identified a significant labor shortage in the industry. In Germany alone, there is a shortage of around 700,000 individuals to carry out installations. Smalt raised €8 million to train unskilled workers using new age tech and education models. The trainees become part of installation squads, and the operation is supported by step-by-step workflow tools. This shows how startups can address real industry pain points.

Pitching to Long-Established Businesses

Successfully pitching to long-established businesses in a conservative sector requires listening to them. Understanding their pain points and how startups can work together to solve them is crucial. It involves weeks and months of discussions with potential customers to identify key problems. Once a customer is interested, there is an opportunity to build a relationship and establish an innovation journey together.

Nonresidential construction planning activity witnessed a decline in November, marking the third consecutive month of cooling. This downturn was highlighted by the Dodge Momentum Index, which dropped 2.3%. Commercial activity saw a 4.6% decrease, while institutional planning increased by 2.5%, partially offsetting the decline.

Slower Planning and Its Impact

Slower planning for data centers, offices, warehouses, and retail projects contributed to the commercial sector's downturn. On the other hand, education projects fueled institutional growth. The institutional segment has shown growth in five of the past six months. Sarah Martin, associate director of forecasting at Dodge Construction Network, stated that throughout 2024, there has been robust growth in nonresidential planning activity. However, labor shortages and high construction costs have prevented projects from progressing at a normal pace. Uncertainty over new tariff and immigration policies under President-elect Trump's administration may also cause some hesitation among developers, although it is too early to determine if this is the primary factor.From a year-over-year perspective, the index is 12% higher than November 2023 levels. Commercial planning increased by 13% during this time, while institutional planning jumped 8%.However, data centers have played a significant role in this growth since 2023. Without their inclusion, commercial planning would have tumbled by 6%, and the overall DMI would have decreased by 1%.Martin still expects a rebound in activity. She believes that easing monetary policy will eventually help alleviate the backlog of projects in 2025 and stimulate more demand for construction in the coming months.In November, seventeen projects valued at $100 million or more entered the planning stage. Major commercial projects included the $350 million Bally's hotel tower and casino in Las Vegas and a $312 million Accokeek data center in Stafford, Virginia.The largest institutional projects to enter planning were a $465 million student dormitory at UC Berkeley, California, and the $323 million intensive treatment tower at Texas Health Presbyterian in Plano, Texas.

BYD, a prominent force in the EV industry, has joined forces with XCMG, China's leading producer of construction machinery. This collaboration has led to the launch of a set of three battery models specifically tailored for construction machinery. These new batteries are poised to make their debut in vehicles manufactured by XCMG, potentially granting BYD a pioneering position in this rapidly expanding vehicle segment.

Revolutionize Construction Vehicles with BYD's Advanced Battery Technology

Super-hybrid Battery: A Balance of Power and Efficiency

This Super-hybrid battery pack showcases a specific energy of 120 wh/kg and an energy capacity of 17.3 kWh. Its 4C charging rate allows for quick charging. Construction machinery powered by this battery can operate with enhanced efficiency, providing the necessary power for various tasks. The design ensures a seamless integration with construction vehicles, enhancing their overall performance. It can withstand the rigors of construction site environments, offering reliability and durability.Moreover, the specific energy and charging rate make it a viable option for construction operations that require continuous power supply. It can quickly recharge during breaks, minimizing downtime and increasing productivity. This battery model is set to become a game-changer in the construction machinery sector, providing a reliable power source for different types of equipment.

Super-fast Charging Battery: Rapid Power on the Go

The Super-fast charging battery offers an impressive charge and discharge current of 400 A and can operate at a voltage up to 1,500 V. With a lifespan of 7,000 charges, it provides long-term usage. Although a 10-minute charge is claimed to offer up to 1.5 hours of use, it still represents a significant advancement in charging technology for construction machinery.This battery is designed to meet the fast-paced demands of construction sites. It allows operators to quickly recharge their equipment during breaks, ensuring minimal interruption to work. The high voltage and current capabilities enable rapid power delivery, enabling construction machinery to operate at full capacity even with short charging intervals. It is a crucial innovation that addresses the need for efficient charging in the construction industry.

Super-integration Battery: Withstanding the Vibration Challenge

The Super-integration battery is specifically engineered for cell-to-body integration into vehicles. Construction machinery is known for its vibrations, and this battery pack is designed to withstand up to six times the vibration intensity of a standard battery pack. Its charge and discharge current of 400 A and energy density of 320 Wh/l make it a powerful choice for construction applications.With a capacity of 97.7 kWh, this battery can provide sustained power to construction vehicles. The integration feature ensures a more streamlined and efficient design, reducing weight and improving overall vehicle performance. It is a testament to BYD's engineering prowess in developing batteries that can handle the unique challenges of the construction environment.All three battery types are engineered to operate within a wide temperature range of -40 to 65° C and at altitudes up to 5,500 meters. This makes them suitable for various construction sites around the world. Mass production of these new packs has already begun, and they are expected to start appearing in XCMG construction vehicles in the near future, bringing advanced battery technology to the construction industry.