With the release of the 2023 BuiltWorlds Annual Venture Report yesterday, we were treated to a year overview of investment activity across the entire ecosystem.
The highest-level takeaway:2023 saw another record-breaking year in terms of deal volume and value. Additionally, that record-breaking activity is mostly due to the huge uptick in investments around infrastructure technology, a product likely of the buzz around the Biden Administration’s near $3 trillion infrastructure bill.
Other areas in the construction tech ecosystem, such as building technology and construction technology, saw a slow down in activity and dollars towards the end of 2023 vs. the rest of the year. But perhaps what was most noteworthy for this audience: the late-year slowing of investment activity around AI/ML.
The release of ChatGPT’s first iteration in late November 2022, and the huge amount of buzz that created, set the stage for what would be the most talked about tech term in 2023 – AI.
As such, the AI/ML sector started 2023 off with a bang led by three +$100 million raises outlined below that were pulled from the BuiltWorlds Venture Dashboard:
- 01/11/2023 – Oxa raised $140 million in a series C funding round
- 01/24/2023 – Gropyus raised $109 million in a series B funding round
- 02/17/2023 – R-Zero raised $105 million in a series C funding round
While Q2 and Q3 held strong activity, in Q4 the activity and dollars flowing in seemed to have halted and even reversed back to pre-GPT levels and hype.
As AI became a commonplace term used across every single tech solution in the industry, it was no surprise to see a huge uptick in investment dollars put into it. In 2023 we saw a flood of new startups touting their “AI-Empowered” or “AI-Driven” solutions.
However, as the other-worldly hype surrounding AI starts to come back into orbit and back down to the planet Earth, many people – investors particularly – have begun to realize that just because a solution leverages AI in some way does not necessarily mean it’s going to change the industry.
AI is an incredibly powerful tool that can help push software further and faster than it’s ever been able to go before, however, it shouldn’t be the main feature of the product itself and instead should be viewed as a tool to assist the software do what it was meant to do more accurately and quicker.
Looking ahead to 2024, the AI/ML ramp-up of adoption on the jobsite and inclusion in software solutions is expected to continue, but it remains to be seen if investment activity will bounce back to 2023 levels. This downturn in Q4 2023 and potential bounceback in 2024 will likely to be a focus of conversation in just a few months at our 2024 Venture West Conference April 2-4 in San Francisco.
What does all of this mean for the industry?
TheBuiltWorlds 2023 Annual Venture Reportwas said that 2023 could be considered a year of “flight to quality”. Based on this trend, we’re predicting many new and existing solution providers will take more care to truly focus on the features of their products and the problems they are solving, rather than attempting to make AI the only face of their business. That shift should help investors who are focused on quality back to the table.
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