Gonzalo Galindo has lead one of the industry’s most active, global corporate venture funds. This year, they broke new ground with a startup challenge backed by fellow leading corporate venture investors Ferrovial, Leonard, Hilti, and Saint Gobain. Already, they have built a an impressive portfolio of investments in reality capture (StructionSite), lean and BIM-based project management (Ipsum), energy storage (EnergyVault), logistics (Lynkx and Gofor), recycled materials (Arqlite), and more. In this talk, we learn about why a major building products and materials company has such a strong strategic commitment to corporate venture and innovation in the sector.
Value Appropriation, a Major Obstacle in the Industry’s Path
His presentation is a great illustration of how building products and materials companies, tool and equipment players, and others around the engineering and construction sector have been working to promote innovation in construction. He offers the surprising thesis, based on years of analysis, that the distribution of value creation is very imbalanced. 47-50% of the profits stay with the banks, developer, and asset owner. Architects, engineers, contractors, and the rest of the project stakeholders split the balance. These thin margins make it more difficult for the industry to embrace innovation and at the same time makes the industry more subject to disruption.
Strategies to Help CEMEX “Ride the Innovation Wave”
Building materials are critical to construction projects, but projects typically get very far along before building material companies are contacted about projects, and they have relatively little ability to influence the projects. The corporate venture arm is part of their effort to be a better partner in innovation as an integral link in the project supply chain. Part of the role of their corporate venture effort is to provide greater insights about the whole value chain, key pain points, how the industry is changing, and how CEMEX can have a good strategy for riding the wave of disruption and creating new business opportunities five years down the road.
Focus areas for CEMEX Now:
Some of the key areas that CEMEX is currently focused on include:
- Innovation in the materials, themselves.
- Improvements in how companies get financing and payments.
- Opportunities to add value through partnerships and joint ventures.
It is all part of an overall effort to add value to the ecosystem and also create more ways for CEMEX to add value in its own business.