With Bay Area Riding High on AI, Global Construction Sector Companies Lean In

Selection Day at Plug and Play in Sunnyvale, CA with Kajima's Yuji Doi, Bouygues' Viviane Andre, Members of the Plug and Play Team
Bouygues' Viviane Andre (second from right) and Kajima's Yuji Doi (right) attended Selection Day at Plug and Play in Sunnyvale, CA. Also pictured (left to right): P&P's Janis Skriveris, BuiltWorlds' Matthew Gray, P&P's Leonardo Rocchetti and Neda Hannah Sohrabi

Venture West Preview

Despite the headlines, the San Francisco bay region remains the world’s leading hub for both technology and venture capital investment, and the recent boom in AI technology has fueled the region’s post-Covid comeback. At the same time, as companies in the construction sector around the world increasingly see the need to to be proactive about understanding trends and honing strategies in response to emerging technology, San Francisco and the broader Bay Area has become a global crossing for the world’s largest construction sector companies.

These firms are forging partnerships with Bay Area-based venture funds, establishing tech scouting outposts, and even forging ties with each other, adding to the strength of area’s economy and making the Bay Area a critical center for leading global AEC Companies and for innovation in the construction sector. 

This week, ahead of our own Venture Conference in the area, we had several opportunities to meet with some of the groups working in the region and get a closer look at the wealth of activity in the space.

Epicenter of the Global AI Rush, America’s West Coast is Nearly a Global, Big Tech Hegemon

If anything, the recent explosion of AI has given the Bay Area an enormous boost that serves as a reminder of the incredible strength and resilience of the area’s technology ecosystem. On the crest of that AI wave, Nvidia has become the most recent Bay Area company to crack the trillion dollar market capitalization level, making the Bay Area home to four of the world’s six largest tech companies by market capitalization with nearby Microsoft and Amazon rounding out the list.

These giant tech companies pump billions of dollars into the region’s tech ecosystem and also spin off high value talent that goes on to support the next generations of startups. Alumni of companies like AirBnB, Google, Linked In, Lyft and others have gone on to become founders of and investors in the AEC tech companies that now dot the Bay Area landscape.

The Bay Area is As Dominant in Venture Capital as it is in Tech

As completely dominant as the region may be in the area of Big Tech, it is equally far and away ahead of other metro regions in its support of emerging tech. According to a recent report in Bloomberg, with more than $200 billion of investments in tech between 2019 and 2021, the Bay Area has accounted for more than a third of all US venture investment during that time, and, in case there were a thought that the area might be losing ground, the report points out that it actually strengthened to 41 percent of all venture capital investment in the United States in the first quarter of 2023.

For comparison, venture capital investment in France, Europe’s largest venture investor in 2023, totalled only 8.5 billion euros, while venture capital investing in all of Asia combined was $78 billion in 2023. Based on the pace of investment in the first three quarters of 2023, it is likely that venture capital investment in California outpaced investment for all of Asia combined, or at least matched it.  

Global Companies Mix a Strategy of Partnering with Local Players and Establishing Beach Heads

With such colossal amounts of capital and intensely concentrated nodes of cutting edge, commercializing technology at play, the world’s major engineering and construction companies are seeing too much at stake to risk being left behind. As a result, they are increasingly forging ties to the regions through direct boots on the ground and investment in the area's funds and network of organizations helping them connect.  

One of the Bay Area's leading connectors is Sunnyvale-based Plug and Play, a group that connects corporates and startups across all sectors and all geographies. Last week, Plug and Play held it Selection Day for its Smart City program which encompasses construction, mobility, energy, and deep tech, as well as a session on the Workforce Revolution. Japanese construction giant Kajima's Cupertino, California-based Innovation Manager Yuji Doi, was among the industry participants. French construction giant Bouygue's San Francisco-based Construction Venture Associate Viviane Andre, also took part in the day, along with London-based engineering giant ARUP.  

Beyond the direct participation of groups from around the world, the Bay Area's AEC venture ecosystem is benefitting from increased engagement with companies from around the world that are investing in funds as LP's.

Recently, Bay Area-based investment firm Zacua hosted an event in Dubai. We met with Vivin Hegde, GP and Founding Partner of Zacua Ventures, last week in Palo Alto where he reported about the growing interest in built world technology there. Meantime, we were also able to meet with Guillaume Bazouin, who recently joined San Francisco-based Brick & Mortar Ventures as its Paris-based, EMEA partner. As the Bay Area's venture firms expand to other locations around the world, they will undoubtedly make more investments beyond their home markets, but they are also drawing in LPs from around the world and entrepreneurs who increasingly are making their way to California where they feed the creative hive that is very much buzzing in the region.