Technology shakes up the € 2 billion construction market


Technological innovators and entrepreneurs across Europe are increasingly turning to the construction industry.

It helps that construction is a mega market of almost € 2 billion on the continent alone. But founders and their investors aren’t just drawn to the size of the market. They are betting on the impact of digital transformation in an industry that was, until now, a sleeping giant.

Construction represents 9% of the EU’s GDP and employs 18 million people. It is also one of the least digitized industries in Europe, with almost stagnant productivity over the past two decades, growing only 1% – a fraction of the improvement of other traditional industries like manufacturing. – according to data from the European Commission.

“The biggest challenges facing the construction industry today are productivity, waste and costs,” says Alban Mallet, founder of XtreeE, which uses 3D printing techniques to produce everything from walls to bridges.

“Productivity because it has barely improved for several decades; garbage because the construction industry faces an urgent need to understand waste management; and costs because there is significant potential for productivity and time savings in this sector.

Read Sifted’s 30 pages on construction technologies in our reports section.

There is enormous waste and inefficiency in today’s construction sites that software, data, and devices are well suited to eliminate.

French start-up Hiboo – which provides a platform to help businesses manage heavy equipment, trucks and vehicles – has found that out of 15,000 pieces of equipment it tracks, there is on average one “Idling” rate: This means the engines are on but not being used.

“It’s a lot of time spent doing nothing,” says Charles Bénard, co-founder of Hiboo. “At the end of the year, if you take a fleet of 50, that’s a million dollars saved and hundreds of tonnes of COâ‚‚ avoided.

Work with companies

Despite a growing toolkit of gadgets, virtual reality headsets, and devices connected to high-tech tablets, the reality on most job sites is that pens and notepads are still the most popular tools out there.

“There is a lot of communication over sensors, the Internet of Things, data and all kinds of modern gadgets deployed in the construction space,” says Emeric Mourot, a French entrepreneur who co-founded My Digital Buildings, which makes construction “digital twins”. sites for virtual visualizations and data capture. “The reality is that this technology affects only a small percentage of the overall market.”

Like Mourot, entrepreneurs across Europe want to change this. With Covid-19 serving as an accelerator, startups are spotting opportunities to become drivers of change, tackling long-standing issues in the industry, from squeezed profit margins to massive amounts of waste – estimated at 374 million tonnes per year. last year only.

Startups are now offering dedicated innovations to address the challenges faced by well-established industry leaders, including French VINCI, Spanish ACS and Swedish Skanska.

Analysis of the data by Foundamental, an investor in construction technology, indicates a sector poised for massive growth. The company benchmarked venture capital finance in construction technology versus other business-to-business (B2B) and business-to-business (B2C) markets. They found that it takes two to four years for each sector to go from $ 5 billion to $ 10 billion in investment, and then another two to three years to go from $ 10 billion to $ 50 billion.

“Construction just passed the $ 10 billion mark and it took 3.5 years,” says Patric Hellermann, general partner at Foundamental. “This is one of the macroeconomic indicators that shows us that over the next two to three years, construction technology will reach $ 50 billion or more. We believe this is the most exciting industry in which to operate alongside healthcare technology and pharmaceutical technology. “

A different approach to innovation

But innovation timelines are very different in construction compared to rapidly changing sectors like consumer technology.

“The construction space is definitely undergoing a digital transformation, but it’s a conservative world. It’s a step-by-step process, ”explains Mourot. “It’s still a relatively new trend and when you think about it, it makes sense: the digital world is, in essence, dematerialized. So there is bound to be some friction when you bring digital into an industry like construction, which is all about the physical, the material. “

Yet the industry must change. Operational profitability is often 5% at best among European construction giants. This leaves little room for error when experimenting with new technology and limits budgets for innovation upgrades. At the same time, it shows exactly why companies need to use technology to figure out how to do more with less.

Conservatism is also the product of market fragmentation, with many different players involved in any phase of a project’s life, from architects to contractors, developers and suppliers. This creates messy coordination and communication issues, leading to rework, delays and unforeseen costs. This serves both as a starting point for innovation and as a barrier to adoption.

Covid wake-up call

Covid-19 could be the shock the industry needs. Construction sites around the world have emptied due to lockdowns and the economic downturn. With the path to recovery still uncertain, both for the sector and for the economy in general, improving productivity is key to business resilience.

Last year, McKinsey ranked Covid-19 as a major accelerator in the transformation of the construction industry and predicted that the sector would be radically different in five to ten years.

According to a survey by construction software maker Procore, 66% of construction companies surveyed in the UK adopted new technology during the lockdown, and 94% reported operational improvements as a result.

“It’s like an old dinosaur that’s finally ready to move,” explains Lucile Hamon, founder of construction technology startup Backacia, a marketplace for unloading unsold materials based on the Station F startup campus in Paris. . “Well-established players are becoming very active in driving innovation, and this is visible in the types of conversations that we, as startup founders, now have with the leaders of large companies. “

Construction technology startups to know

Here are some of the names to know in construction technology. To learn more, read Sifted’s 30 pages on construction technology in our reports section.

Durable materials

Provide environmentally friendly building materials, for example from recycled or natural materials.

Startups to know: Combo Solutions, Ricehouse, Lick, Nanogence, Celloz, Sustonable and System 3E

Modular construction

Develop construction concepts based on modular components produced in off-site factories and assembled on-site.

Startups to know: Novito, Brette Haus and Modulous

Online Markets

Connect construction companies with third parties offering various services.

Startups to know: Warmango, Bobtrade, Doozer and Relok

Project management software

Simplify the administration of construction projects by focusing, for example, on safety, site supervision, budgeting, or a combination of these.

Startups to know: Hiboo, AOS, Voyage Control, Viibee, Fieldly, Buildsafe, Myades, Smartbeam, Bulldozair, PlanRadar, Reinvent, Capmo and Alasco

Building information management

Facilitates collaboration between construction stakeholders by generating 3D building models.

Startups to know: Infogrid, Bimspot, Wizzcad, 3D Repo and XYZ Reality

Data analysis

Generate information on construction projects based on historical or project-specific data.

Startups to know: Converge, Spacemaker, AI Clearing, Contilio, Qualis Flow, NPlan and Aprao

Marie Mawad is Sifted’s French correspondent. It also covers AI and tweets from @Marie_a_Paris. Kit Gillet is Sifted’s correspondent for Eastern Europe. He tweets from @KitGillet

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