Why Exits Lag Behind Innovation in Built-World Tech

Despite the innovation transforming construction technology, exits haven’t quite kept pace. Tools that digitize the jobsite, automate bidding, and integrate project data have transformed how the built environment operates. But when it comes to liquidity events, consolidation, or scale-stage capital, many promising startups remain in limbo.

While preparing for the Searching for the Exits panel at Venture East 2025, one question continues to emerge: Why does innovation in construction tech continue to outpace exit activity, and what will it take for the market to catch up?

The Innovation Engine Is Running Hot

Over the last decade, construction technology has advanced more rapidly than any other point in the industry’s history. The modern jobsite is becoming fully digitized through drone mapping, VR training, BIM integration, AI-powered estimating, and much more. This momentum has been driven by structural pressures such as labor shortages, supply chain disruptions, and margin compression that have forced contractors, engineers, and owners to work smarter, not harder.

Investor enthusiasm has followed. Global construction tech investment has scaled from under $3 billion in 2017 to over $12 billion in 2024, with record valuations for high-performing platforms. Major strategics like Autodesk, Trimble, Procore, and Hexagon have executed a string of acquisitions, aiming to deliver end-to-end solutions across the project lifecycle.

Clearly, innovation is not the problem.

The Exit Gap

Despite rapid growth and an increase in M&A transaction volume, exit activity remains uneven. The median deal size and post-money valuations haven’t reached levels seen in other software sectors. While headline deals like Procore’s acquisitions of Flypaper and Novorender made waves, many startups find themselves operating in a fragmented ecosystem dominated by a handful of incumbents.

Three structural factors explain the lag:

1. Longer Sales Cycles: Enterprise adoption in construction moves slowly. Convincing GCs, subcontractors, and owners to adopt new technology across multiple projects often takes years.
2. Hardware Dependencies: Unlike pure SaaS models, built-world tech often relies on sensors, scanners, or other physical components that make scaling and valuation more complex.
3. Fragmented Customer Base: The industry remains highly regional with limited standardization in how data and workflows are shared across projects and trades.

The result is a market where innovation runs ahead of integration and promising startups wait for the level of scale that attracts major acquirers or private equity roll-ups.

Over the last decade, construction technology has advanced more rapidly than any other point in the industry’s history.

Consolidation Is Coming, But Selectively

All of this is beginning to change. According to Meridian’s analysis, investor optimism has returned to pre-2022 levels with leading strategics actively pursuing tuck-ins that strengthen their ecosystems. Valuations for many construction software companies exceeded 10x revenue in 2025, reflecting renewed confidence in growth and profitability.

We’re seeing consolidation along three clear lines:

1. Workflow Unification: Acquirers want platforms that connect field, finance, and facilities into one cohesive data stream.
2. Safety and Compliance: ESG-linked mandates and labor tracking are driving acquisitions in safety and reporting software.
3. AI & Analytics: Tools that turn data into actionable insights are commanding premium multiples and faster exits.

This next wave of M&A is less about buying market share and more about building interoperability for a fully digital jobsite.

How Does This Impact Founders and the Industry?

For founders, the lesson is to scale sustainably but design for acquisition. Demonstrate that your product can plug into a larger ecosystem through APIs, integrations, or data standards. Buyers are looking for solutions that remove friction.

For contractors and construction firms, consolidation brings both opportunity and caution. Integrated platforms will simplify workflows, improve safety documentation, and reduce duplication, but relying on a smaller pool of tech providers may limit flexibility and drive up subscription costs.

Long-term winners will be companies that embrace technology to improve productivity and profitability while maintaining vendor optionality.

The Road Ahead

The construction sector accounts for roughly 13% of global GDP, yet it remains one of the least digitized industries. That gap represents an enormous opportunity for innovative thinkers who can build scalable, acquisition-ready businesses with these new tools.

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Matt Rechtin is a Managing Director at Meridian Capital, a middle-market investment bank specializing in mergers & acquisitions, capital solutions, and strategic advisory for founder-led businesses across the built environment and others in the Consumer, Industrial, and Technology sectors.