This week:
AI procurement agents in construction, and why construction supply chains are perfect for it
Raising capital from generalists vs specialists (and from Foundamental specifically)
Why diligence that heavily relies on strategics can be very mis-leading
AI "procurement agents" could automate construction sourcing
Using AI "procurement agents" in construction supply chains could help contractors automate sourcing materials, sending RFQs, and comparing supplier quotes. Patric discusses "what if the procurement manager gets a copilot that listens on the channels through which the communication happens semantically?" This type of automation is valuable for B and C category construction materials that are purchased frequently but have lower order values. It does not replace human decision making but acts as a productivity tool.
Construction supply chains remain unpredictable
Construction supply chains are more unpredictable than manufacturing, with many interdependent variables that are constantly shifting. Patric gives an example of a "flooding in the plant" causing supply chain chaos even in auto manufacturing. Shubhankar says construction lacks the "predictability of auto manufacturing". They agree AI could help make sense of the many variables, but the industry is still far from being able to reliably predict outcomes based on a given set of constraints.
Audits become critical in larger funding rounds
For early stage founders raising VC, the focus is more on assessing the founder's background and skills along with validating the market thesis. As founders raise larger rounds, Shubhankar notes "high quality VC firms will insist on an audit being done, and on a sign off from what we refer to as big four or big five auditors" for larger funding rounds, while early stage is more about founder talent and opportunity thesis.
Specialist VCs focus on founders, not pitches
As specialist construction tech VCs, Patric and Shubhankar rely less on having founders pitch to the full team. Patric says "we don't invite founders actually to present to the whole team, but instead work only with, the lead partner actually." They focus more on checking founder references and having in-depth thesis discussions. Patric notes founders appreciate this difference versus needing to condense their entire company down to a single 30 minute zoom pitch.
Strategic diligence can miss great investments
Some specialist VCs over-rely on network strategics for diligence validation rather than properly contextualizing the opportunity themselves first. Patric argues "if they don't approve, even if everything else makes sense for me as an investor and I contextualize it, et cetera, I can't move forward because they don't like it. Like, okay, then you're wasting the founder's time." He and Shubhankar believe in forming their own point of view complemented by market experts on opportunities rather than outsourcing diligence to seek validation.
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Keywords: construction tech, AEC, AI procurement agents, supply chain automation, construction supply chains, construction predictability, VC funding audits, specialist VCs, founder diligence, strategic diligence