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High turnover but little innovation in the construction industry
This episode also begins with event announcements, then we turn to the construction industry starting at minute 2:25. The World Economic Forum estimates that, due to global population growth and increasing urbanization, a good $6 trillion flows into the construction industry annually. This would be 7.5 percent of global gross domestic product. In Germany, construction investments accounted for as much as 10.9 percent of gross domestic product in 2019. However, this turnover is offset by a lack of innovation, especially when it comes to digital solutions. According to McKinsey The productivity growth in the construction industry over the past two decades has been only around one percent annually.
Based on a study by PwC This also provides an insight into the industry's level of digitalization. In 2019, auditors asked companies in the industry whether they used Building Information Modeling (BIM). BIM is a digitalization approach that considers the entire life cycle of a building. The result: Only 18 percent of respondents answered "yes," meaning they are already using BIM. Every second company stated that it was difficult to find suitable solutions.
Digitization of construction management
At least in Munich, however, there are several startups that have developed corresponding solutions for the construction industry. One of them, for example, is Alasco (from minute 4:35). The SaaS solution of the startup, founded in 2018, helps with the financial management of complex projects by compiling all financial data of a construction project in a central overview. This provides project managers and clients with an overview of the current financial data of the construction project across all construction phases. With this approach, Alasco has already convinced several investors and most recently received €7.5 million in a Series A financing round in June 2020 – already during the coronavirus pandemic.
The startup Capmo (from minute 7:15) has developed an app for digital project management and construction documentation. It digitally records construction plans and makes them available on all registered devices—even offline. Photos from the construction site are saved directly in the app and automatically located in the construction plan. The app also allows tasks to be distributed among all those involved in the construction project, which should facilitate collaboration and simplify defect documentation. The startup, also founded in 2018, raised €5 million in Series A funding at the beginning of 2020.
Something similar to Capmo also offers Reinvent (from minute 9:10), however, the startup focuses on communication between all parties involved and also includes customers. Reinvent's software solution connects project participants on a cloud platform that enables communication as well as document management. This bundles the information, tasks, and documents relevant to all parties involved. For buyers and tenants, the software provides interactive exposés, 3D apartment configurators, and digital tools for special request management or for the acceptance of properties. The company, which has been active since 2016, was able to impress Carsten Maschmeyer's venture capital fund Alstin Capital, among others, this summer when it raised a seven-figure sum in its Series A financing round.
Solutions for the construction site itself
The startup shows that not only the management of a construction site, but also the construction site itself can be digitalised Conxai, which we will introduce to you from minute 11:05. The startup, founded in early 2020, uses existing sensors on the construction site, such as cameras installed for theft prevention, to feed its AI platform with data. This allows the AI to monitor the construction site in real time to identify problems in areas such as safety, quality, or logistics. The founders' goals, however, go even further: In the future, the solution should be able to detect when something goes wrong with the help of a digital twin of the construction site and knowledge of the construction plans. This should prevent, for example, the wrong wall from being built. This would not only save work but also reduce construction time and costs.
Cameras also work Abaut (from minute 13:30). The startup has developed a smart camera system that autonomously detects processes relevant to the construction process. For example, it can monitor the fill levels of construction waste containers and the completion status of individual construction phases. Part of the solution also includes a plug-and-play solution for retrofitting heavy machinery. The machines are equipped with an intelligent sensor unit and cameras that record and analyze construction processes. The startup has been active since 2017.
The last startup from the construction industry that we present in this episode is Corrux (from minute 15:40). The founders want to use their analytics platform to optimize the use of heavy equipment such as construction machinery or cranes. To this end, the software tracks the utilization of excavators, for example, on-site in real time. The software thus digitizes machine management, which is often still done with pen and paper. And the more widely Corrux is used, the easier it becomes to manage machine availability.
Ryte and Octopus Investments
In the second part of the podcast (from minute 18:50) we focus on the software startup Ryte, which is a Second Closing announced its Series A financing round. Thanks to Bayern Kapital and the Bavarian Growth Fund, the startup has now raised a total of €8.5 million. In January, they had already received €6.5 million from other investors. One of these investors is Octopus Investments, part of the extensive – and financially strong – UK-based Octopus Group. It manages more than £9.1 billion in investments and is one of the largest early-stage, venture, and growth capital investors in Europe. Through numerous firms, the group invests in a wide variety of business areas.
