The construction industry is notoriously slow to adopt technology. But a new venture capital firm backed by large traditional construction companies is trying to change that.
Zacua Ventures has launched its first $56 million fund for early-stage construction technology startups, backed by 19 leading construction companies. The limited partner group includes Procore, a provider of construction management software; Volvo is a manufacturer of trucks, buses, and construction equipment. and sustainable construction materials company CEMEX.
Bivin Hegde, Mauricio Tessi Weiss, and Juan Nieto founded San Francisco-based Zacua in 2022. Hegde previously worked at construction tool maker Hilti Corporation, while Tessi Weiss and Nieto were at Cemex Ventures.
Because the construction industry is dominated by small and medium-sized companies, technology adoption is “very fragmented,” said Tessi Weiss, Zaqua's head of European Union and Latin America. Finding startups that can address this is one challenge, but also a huge opportunity, Weiss believes. While many of these companies are digitizing paper processes, “Today, technology is taking off in a variety of areas, including AI, industrialized construction, IoT devices, and robotics.”
With this change, more and more startups are developing solutions. Most recently, Kleiner Perkins made his $31 million Series A investment in PermitFlow. The funding is intended to “build TurboTax for construction permits.” Meanwhile, Buildstock, his B2B marketplace and fintech platform for construction materials, raised his $1.6 million in pre-seed funding. Last week, a group of investors, including precursors, put forward a proposal to address one of the industry's biggest problems: delayed payments.
Considering that the construction industry accounts for approximately 14% of the world's gross domestic product and 40% of global greenhouse gas emissions, Zacua is committed to sustainability, not just productivity and urbanization. The company is targeting startups, Tessi Weiss said.
Within these three boxes, the partners at this venture capital firm, which also has regional offices in Spain, Mexico and Singapore, are looking for startups that improve efficiency across the construction industry, for example. Reducing the carbon footprint of construction and building operations more broadly. And it will contribute to the development of resilient, intelligent structures that will ideally serve the cities of the future, said Hegde, the North American representative.
Since the fund's launch, Zacua Ventures has invested in more than 10 startups across the construction technology ecosystem. The company's portfolio companies include Construex, his Software-as-a-Service marketplace for the construction and design industry based in Ecuador. Most recently, he led his $9 million seed round at Data Infrastructure startup Flexnode.
“Raising an initial $56 million in an environment like this is not something we haven't seen many people do, and it's true that we've been able to do it in certain areas. .We are talking about the opportunities ahead,” Hegde said.