Private Equity Rolls In With Rollups

Private equity players are rolling into the built-world innovation market with a growing appetite for technology rollups. These capital-juiced investment firms are creating value through M&A by rolling up construction & building tech point solutions struggling to break above ~$5M to ~$10M in ARR into a single congruent platform with a degree of scalability they couldn’t have achieved alone in this concentrated & fragmented market.

AEC-Tech adoption remains in its infancy with tech utilization outside the ENR 400 remaining scant – BuiltWorlds Benchmarking data suggests that only about 1/3rd of surveyed construction companies under $1B in revenue have fully adopted a project management solution (this data may be slightly skewed to the upside considering the forward-looking nature of our members) – pressuring startup’s near-term TAMs.

Venture-backed construction tech ventures (aka ConTech) are seeing revenue deceleration as they approach ~$5M to ~$10M in ARR due to depressed ACVs in a concentrated & fragmented market as adoption remains sparse. Consider this, if a construction SaaS solution has an ACV of $10K (which is generous considering the average B2B SaaS ACV is only about $1K) and manages to attain every company within the ENR 400, its ARR would only be $4M. Short of a costly product expansion effort, a ConTech startup with an ACV below $50k will be hard-pressed to grow much beyond that ~$5M to ~10M ARR hurdle.

Below you can see some of the bigger private equity rollup deals in the built environment.