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Contech funding plummets in 2023, despite more deals


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 Dive Brief:

  • The seemingly unstoppable growth of construction technology funding came to a screeching halt last year, as total investment in the space dropped to $3 billion in 2023 from $5.4 billion in 2022, a 44% decrease, according to an annual report from Cemex Ventures. The total number of deals increased to 236, however, up slightly from the previous annual total of 228.
  • The contech-focused venture capital arm of Madrid-based Cemex said investors were more conservative due to macroeconomic factors such as steep interest rates, geopolitical conflicts, inflation and upcoming elections.
  • Even as cash became scarcer, contech has continued to make up a broader part of the overall venture capital ecosystem, per the report. In 2020, contech represented 0.60% of overall VC investment, and it rose to 1.06% in 2023.

Dive Insight:

Cemex broke down 2023’s contech funding totals into four categories:

  • Green Construction: Processes, products and services that offset construction’s negative environmental impacts raised $1.06 billion in 2023.
  • Enhanced Productivity: Digital solutions aimed to increase efficiency through technical, data-driven solutions pulled in $701 million last year.
  • Future of Construction: Programs such as AI, robotics and industrialized construction machine-assisted applications, like 3D printing robots, BIM and autonomous equipment garnered $690 million in 2023.
  • Construction Supply Chain: Offerings that help contractors secure materials, such as technologies that track materials and fleets, manage builders’ inventories and material marketplaces earned $584 million last year.

Almost half the cash (49.5%) came in initial seed rounds, which are usually the hallmark of early stage startups. Series A funding rounds, which go to more mature companies, accounted for 23.3% of funding. The number of seed rounds also increased from 91 in 2022 to 117 in 2023.

Location was also a factor. The U.S. saw 44% of all contech deals, followed by Canada, with 11%, and the U.K., with about 10%.

The U.S., Cemex Ventures wrote, will continue to be a strong part of the investment ecosystem in 2024, while some locations, like Latin America, will remain the same as last year. Europe will see slightly less activity than the U.S., but will lead in investments related to green construction and sustainability.

Cemex Ventures predicts that the first half of 2024 will see the industry stabilize after the drop in investment from 2023, per the report, and reiterated that there is still widespread demand for contech and construction innovation.

“Last year’s decline in contech investment should not be confused as a sign that investors are cooling off and looking elsewhere,” the report said. “As a matter of fact, the increase in the number of deals from 2022 to 2023 shows that investors still have their sights set on contech especially on Cleantech and on technologies that promote construction’s digitalization.”



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