I have a bit less time this week for a longer researched piece. Since we just kicked 2023 off, thought it would be interesting to share a few spaces and models which got me excited in 2022 across the AEC-Tech world, and where they might be going in 2023.
(example investments I mention below include both first cheques and follow-ons)
The $20B acquisition of Figma by Adobe in September brought multiplayer design back on the menu of many investors. We believe that multiplayer design and CAD – both in 2D and 3D – will be vertical. Demonstrated already by the eg. ntopology, we also believe that retooling the architecture, engineering and design stack with multiplayer solutions, and building a n:n API infrastructure around it, is a Decacorn frontier.
Example investments we made in 2022 are Rayon, Snaptrude and Speckle.
I am EXTREMELY keen to do do more in retooling the AEC design space with great software and highly differentiated technology in 2023.
Building owners operate ca. 69 billion square meters of floor area in North America and Europe. And all that space needs heating. Gas supply came under shock in 2022, and the result was an extreme price volatility in fossil fuels.
Well, in Europe, 80% of buildings are heated with fossils – gas and oil (and in some parts of Europe even coal).
Additionally, the EU is introducing ever-more ambitious decarbonization targets and regulation for building owners.
Hence, we made multiple new partnerships early in Q1 2022 with amazing teams who fix the rapid thermal renovation and upgrading of the European building stock.
Example investments from 2022 are Baupal, Lun and a company I cannot announce yet but which is building the one-stop shop for retrofitting insulation across European buildings.
This space has developed rapidly in 2022 with several amazing teams. In 2023, I am keeping my eyes peeled for various not yet-addressed opportunities in this space, one of which is fixing the financing journey for B2B and B2C customers in thermal renovation.
The West is running into very deep issues with regard to skilled labor supply. I plan to run a detailed research piece about this in the coming weeks.
We see 3 levers to fix this issue:
Example investments from 2022 are Forge, PowerUs, and Werk.
Very keen to dig deeper into blue-collar academies, tech-enabled full-stack employers-as-a-service, and payroll and earned wage access solutions for construction and renovation, among others.
Same fundamental market gap as on the skilled labor shortage front, but solved differently.
Very excited about advanced robotics for construction (renovation also, but much more difficult due to lowest standardization and controllability of surrounding environment).
When partnering with robotics founders, I am looking for
Example investments from 2022 are Terraform, Reframe and SafeAI.
We are extremely bullish on robotics for construction, and will look at every deal that fits our above criteria.
Construction is moving into the teenager stage of digitalization, and part of that is because enterprise customers are adopting project management softwares and one-stop shops for building materials. From both ends, we are seeing how more and more integration opportunities emerge, which are resulting in even bigger one-stop shops. Infra.Market from our Fund-1 portfolio is a great example of this, and we see this trend go around the world.
Example investments from 2022 are Brick & Bolt, GoCement, Latii, an unannounced one-stop shop for cross-border building materials in Germany, and an unannounced one-stop shop for sub-saharan Africa, and an unannounced Zetwerk for Mexico.
Super keen to do more in this space, and in Europe specifically, procurement softwares that connect domestic suppliers with domestic demand on top of which they load software and procure-to-cash workflow automation.
300 basis points on central bank rates make a huge difference at wall street, and in the real economy. We have seen a rise of receivables and payables at contractors in 2022, across enterprise and SMB.
All the while, in construction, suppliers have always been the secret working capital banks of the industry. Now with increasing cash cycles, this reaches real limits.
As margins come under pressure as well, the ability to control my contractor business and my projects regains a premium.
With these tailwinds, we have been excited to back financial operating systems, materials-price hedging solutions, and automated access to working capital for contractors and suppliers.
Recent example investments are Tazapay, Earlytrade, Graneet, Adaptive and an unannounced commodity price-hedging platform for general contractors.
Very keen to partner with more and more differentiated avatars across the world un-tightening the cash cycles across AEC.
And a last big thing going into 2023 on my personal radar is vertical search within AEC. The release of OpenAI’s trained ChatGPT model in November caused a major re-buzz around what AI will be able to do.
Within my scope – architecture, engineering and construction – I see major applications of AI for vertical search. By vertical search, I mean for example that we have millions of stock-keeping units (SKUs) in our industry, over tiles, paints, roof shingles, concrete, steel variants, fabrics and so on. And these SKUs are described by dozens of properties. It is a major pain for manufacturers to manage their product portfolio, let alone make it truly searchable for their customers – designers, architects and contractors.
At the same time, manufacturers keep pushing the boundary on moving closer and closer to their end customers, but without the infrastructure to allow direct B2B shopping.
I am super keen to partner with founders who build vertical search infrastructure, ideally with design-stack components and webshop components. Most excited by distribution as infrastructure and API plays.
An example investment we did in 2022 is Mattoboard.
Hit me up if you are building in any of these spaces, or other frontier spaces in AEC-Tech. I love to be ahead of the curve.