This week's main topic:
Construction firms increasing software budgets despite cuts in other sectors
Utilization and margins driving need for process improvements and new software
Construction projects provide flexibility to trial software on select projects
Supply chain and working capital financing software of interest right now
We also chat about:
AI applications emerging in construction tech deals; use cases matter for defensibility
(Tech) conferences often echo chambers with little ROI; why small, focused events prove useful
Construction bucks trend with increased software budgets
Construction firms are bucking the trend of software budget cuts seen in other B2B sectors and increasing investments in new software. With lower utilization and more time between projects, contractors have a new opportunity to dedicate resources to optimizing processes and software stacks without disrupting active projects. As Patric notes, "New software that helps you generate margin, that helps you generate cash flow, software that helps you generate new orders. That's part of the stack that you currently want to implement especially."
Utilization and margins driving need for process improvements and new software
With utilization dropping and order books decreasing, contractors have more time between projects to focus on process improvements. As Patric explains, "I'm absolutely not fussing with a running project. I'm not doing it. And if I have a full portfolio where my people are utilized, I also don't have any time in between projects to make an adjustment." Minimizing errors, defects and delays is critical to protecting margins, so firms cannot tweak active projects. Without the ability to enhance active projects or standardize between them, new software provides a way to drive efficiency and quality.
Construction projects provide flexibility to trial software on select projects
The nature of distinct construction projects gives firms flexibility to pilot software on targeted projects first. This allows proving value before convincing more reluctant managers or crews to adopt new tools. As Patric states, "Let's prove one thing and then scale the thing that we've proven." Firms can take an incremental approach rolling out software across projects once initial successes demonstrate its impact.
Supply chain and working capital financing software of interest right now
Software helping supply chain managers handle daily disruptions using AI and that enables arbitrage between contractors and developers through working capital financing have caught investor interest. As Patric shares, "It does have semantic AI as part of that to basically help them structure that. So that's a space I'm interested in." The timing of these solutions matches current pain points around volatilities and cash constraints.
AI proliferating across construction-tech use cases
Investors are seeing a growing number of construction tech applications leveraging AI. As Shubhankar notes, "I'm digging into some AI applications, dude." The proliferation of AI reflects its expanding capabilities and viability in addressing industry challenges. Construction tech investors need to understand AI's potential despite its hype in order to identify quality opportunities.
Curated Constru-Tech events deliver more value
Large tech conferences often serve as echo chambers without real ROI despite claims around networking. As Shubhankar notes, "You think you're making a point because you're hearing the voice, and it's quite loud and amplified. But all you're doing is talking or maybe screaming into a small enclosed space, which reflects your own voice back to you." Truly valuable events are highly curated around a specific topic with subject matter experts exchanging facts and insights. Small groups assembled by topic and quality of participants are most worthwhile for actionable learning.
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Keywords: construction tech, AEC technology, construction software, AI in construction, construction industry trends, construction conferences, supply chain software, project management software, B2B software budgets, construction margins