The construction sector is known for its slow embrace of technology. But a new venture capital firm, funded by some heavyweight legacy construction companies, is out to change that.
Zacua Ventures has launched its inaugural $56 million fund targeting early-stage construction technology startups, backed by 19 of the construction sector’s biggest corporations. The limited partner group includes Procore, a provider of construction management software; Volvo, a manufacturer of trucks, buses and construction equipment; and sustainable construction materials company Cemex.
Vivin Hegde, Mauricio Tessi Weiss and Juan Nieto started San Francisco-based Zacua in 2022. Hegde was previously with construction tool maker Hilti Corp, while Tessi Weiss and Nieto were at Cemex Ventures.
Because the construction industry is dominated by small and medium companies, adoption of technology has been “very fragmented,” said Tessi Weiss, who represents the European Union and Latin America for Zacua. Finding startups that can address this is one of the challenges, but also a big opportunity, Weiss believes. While many of these companies have digitized paper processes, “today we see technology starting in many different fields like, AI, industrialized construction, IoT devices and robotics.”
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With that shift has come more startups developing solutions. Most recently, Kleiner Perkins led a $31 million Series A into PermitFlow, which aims to “build the ‘TurboTax for construction permitting.’” Meanwhile, Buildstock, a B2B marketplace and fintech platform for construction materials, raised $1.6 million in pre-seed funding last week from a group of investors, including Precursor, to address one of the industry’s big pain points of late payments.
Given that the construction industry represents around 14% of worldwide gross domestic product and is responsible for producing 40% of total worldwide greenhouse gas emissions, Zacua is targeting startups addressing sustainability as well as productivity and urbanization, Tessi Weiss said.
The venture capital firm’s partners, who also have a regional presence in Spain, Mexico and Singapore, look for startups within those three buckets that will, for example, enhance efficiency across construction industry; reduce the carbon footprint of construction and building operations more broadly; and contribute to the development of resilient, intelligent structures that are ideally equipped to serve the cities of the future, said Hegde, who represents North America.
Since the launch of its fund, Zacua Ventures has invested in over a dozen startups across the construction technology ecosystem. Among its portfolio companies is Construex, an Ecuador-based software-as-a-service marketplace for the construction and design industries. It more recently led a $9 million seed round in Flexnode, a data infrastructure startup.
“Raising a $56 million first-time fund in this kind of environment is something that we haven’t seen a lot of people do, and the fact that we’ve been able to do it, and in a specific sector, just speaks to the opportunity that lies ahead,” Hegde said.
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