This week:
Data > AI: Data infrastructure and databases for AEC gain faster adoption than AI tools built on top, as firms still lack data foundations
One mega acquisition: Legacy AEC software vendors will acquire modern SaaS design platforms that pose existential threats, gaining next-gen capabilities
Robotics > migrant ed-tech: Construction robotics firms automating repetitive low-fidelity trades will scale faster than educating migrant workforces facing policy declines
Building energy renovation hits another inflection: Europe's home energy renovations will accelerate further as solar subsidies fall, grid costs climb, and governments maintain and increase renovation incentives
India to US corridor becomes dominant for Constru-Tech: Indo-American hybrid construction tech startups will proliferate, benefiting from strong funding, talent pools and construction growth across both regions
Bold prediction 1
Data infrastructure grows faster than AI tools in AEC in 2024
Data infrastructure and databases for construction 3D and flat data will gain more rapid adoption than AI tools built on top in 2023. AEC companies currently have fragmented data systems and insufficient data structuring, preventing effective AI deployment. Current regular common data environments (CDEs), as Patric states, "are not data infrastructures. They are more like data rooms in deals." Companies building modern common data environments, storage and pipelines tailored for construction data gain traction by "build[ing] the pipes, they build the data lakes." These underlying data platforms enable end-to-end process automation and leverage data across the firm. They grow faster next year than AI tools reliant on this still-emerging robust data foundation.
Bold prediction 2
Legacy vendors acquire one big next-gen threat in 2024
Expect a major acquisition in the AEC design tool stack space, likely by an incumbent threatened by collaboration and data technology. New entrants are launching modern, collaborative, cloud-based design platforms that incumbents view as threats, especially to their legacy desktop products. As Shub says, these startups "represent an existential threat to a lot of these firms, right? Including to their flagship products." The pace of tool innovation has lagged needs, prompting aggressive moves once threats emerge. Acquirers gain modern web/mobile capabilities and next-gen platform business models, while neutralizing disruptors. Such deals catalyze funding and innovation across the outdated AEC tool chain.
Bold prediction 3
Construction robots outpace migrant worker education in 2024
On-site construction robotics companies will scale faster than workforce education models for migrant labor in 2024. Automating repetitive tasks where a comparatively low visual fidelity is required like bricklaying or roofing, gains appeal. As Patric notes, "robots can do the hard things very easy and they can hardly do the easy things. That’s a focus." Meanwhile, anti-immigration policies reduce migrant worker adoption, despite labor shortages. Robotics firms with strong products for trades requiring less visual acuity and range of motion onboard customers faster than workforce education can offset policy shifts.
Bold prediction 4
Europe building renovations hits another inflection in 2024
Energetic building renovation models will accelerate in Europe as energy prices rise and solar subsidies decline in 2024. Falling solar subsidies and grid subsidies in Germany and across Europe prompt gas and electricity costs to continue climbing, squeezing households and businesses. With renovation incentives still in place, the economics of upgrading insulation, HVAC and appliances become more compelling. As Patric predicts, "the energetic renovation models in Europe and to a degree it will happen in the US as well...will accelerate further." Governments double-dip to accelerate the building energy renovation further - by having energy prices increase while keeping and increasing subsidies for building renovations. An ecosystem of assessment, design and finance tools gains adoption to capture this burgeoning opportunity.
Bold prediction 5
Indo-American Constru-Tech startups proliferate in 2024
The number of "American-Indian" hybrid startups serving US and India markets will dramatically increase in construction tech in 2023, benefiting from stronger collaboration between the two vibrant ecosystems and funding sources. India has boomed in IT services, product startups and construction, presenting experienced talent. The US dominates technology while India outpaces all in construction growth. Shared cultural ties ease partnerships between investors and founders across the regions. As Shub observes, "it makes a whole lot of sense. You're capturing over two thirds of the action right now." The opportunity has reached critical mass for dual-market services firms to proliferate.
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Keywords: construction technology, AEC industry, data infrastructure, AI adoption, design tools, mergers and acquisitions, construction robotics, migrant workforce, building renovations, energy efficiency, American-Indian startups, transnational collaboration