AEC-Led Contech Investments Boost Construction Companies’ Profits

Construction companies from all around the world are increasingly investing in construction tech (contech) startups, with the intention of streamlining operations, minimizing costs, and increasing efficiency. With dedicated funds to accelerator programs and direct investments into startups, large construction companies are betting big on the future of the built world’s transformation with emerging technologies and digitalization.

Bouygues, one of the world’s largest construction companies, has launched an 80 million euro fund to invest in construction tech.  Leading US contractor, Hensel Phelps, announced the formation of DIVERGE, their new innovation arm earlier this year. Additionally, estimating software platform, Togal.AI recently announced a $5 million funding round with participation from Miami-based Coastal Construction. Construction companies have been investing in the industry’s startup tech companies for years, but the trend appears to be accelerating, as construction companies continue to see lots of opportunities for emerging technology and to leverage their expertise to get in on the profits.

At our recent CEO Forum Annual Meeting, 70% of participants indicated their company was making contech investments in the sector, and the majority indicated that they would be increasing their levels of investment in coming years.  Beyond serving as customers of technology companies, industry players are getting much more involved in the investment side of technology development. Below is a look at three ways companies are getting engaged.

1. Direct Angel Investment in Startups

Direct angel investors are becoming increasingly popular within the industry. AEC Angels is a group of companies that collectively invests directly in startups within the industry. Many companies are also making direct investments into startups in support of their early launching. Togal.AI, Brayman, Advanced Construction Robotics, EllisDon, Compass, Kiewit, and Ineight are all examples of such investments. On top of financial support, these companies also provide valuable insight about the industry, networking opportunities, and mentoring opportunities for these startups.

2. Corporate-Backed Venture Funds

Corporate-backed contech investments are gaining momentum as companies begin to recognize the value of uplifting innovation led by startups within the industry. To support these startups, companies are beginning to establish standalone funds in which managers can be compensated similarly to fund managers, and where investment partners can be potentially outsourced. Two examples of such companies are Bouygues and Suffolk, with Bouygues investing $80 million and Suffolk investing $100 million in their respective funds.

3. Strategic Innovation Groups

Many companies are beginning to establish strategic innovation groups to both invest in and support the development of contech startups. Some companies use these groups to invest in or work with multiple startups, some from within their firm and some external startups too. WND, DIVERGE, and Dysruptek are examples of such companies that have established these partnerships for contech investments. These companies help to push innovation and foster collaboration between startups within the industry.

Join BuiltWorlds at our upcoming Summits in Paris and Chicago, where we’ll dive even deeper into the industry’s corporate venture initiatives. At the 2023 Paris Summit, you will have the opportunity to meet some of the industry’s biggest global innovators, while at the 2023 Americas Summit, you can expect to meet more mid-sized companies in the sector during our CEO Roundtable.