Ever wondered why some construction firms are hitting pause on new software purchases? We've been picking up on an interesting trend lately - some major general contractors are getting software fatigue. When the head of strategy at a global construction firm tells you they're considering a freeze on new software, it's time to pay attention.

This Week On AEC_VC - tl;dr

Software fatigue signals potential shift in construction tech adoption

Working capital formula reveals true profitability for AEC tech startups

Knowledge scaling trumps network growth in specialized VC investing

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Software Fatigue Signals Potential Shift in Construction Tech Adoption

Are Major Contractors Really Hitting Pause on New Software?

Two major global general contractors have recently hinted at putting the brakes on new software acquisitions. While two data points don't make a trend, they're significant enough to warrant our attention. These aren't small players we're talking about - these are industry leaders who typically set the pace for technology adoption.

What's driving this hesitation? It's not just about budget constraints. The construction industry has been on a software buying spree over the past few years, leading to what we might call "digital tool overload." Companies are realizing they need time to properly implement and integrate their existing solutions before adding more to the mix.

The implications here are significant for both construction firms and tech vendors. For construction companies, it's about maximizing the value of their existing tech stack rather than continuously adding new layers. For software providers, this could mean a shift in focus from new sales to helping clients better utilize their current investments.

More here: https://www.linkedin.com/posts/aecvc_constructiontech-digitaltransformation-innovation-activity-7295814281776779264-DsLW?utm_source=share&utm_medium=member_desktop&rcm=ACoAAA_eMOwBZSjLkRAw_FJQ1BTRRREGKIiyP1g

Working Capital Formula Reveals True Profitability for AEC Tech Startups

How Do You Measure ROI in Working-Capital-Intensive Construction Tech?

Working capital management is becoming increasingly crucial in the AEC tech space, especially for businesses operating beyond pure SaaS models. We're seeing this particularly in marketplace businesses, Operations-as-a-Service (OaaS) providers, and construction FinTech companies.

Traditional SaaS metrics don't tell the whole story when working capital becomes a significant part of your business model. The formula we've developed internally looks at how working capital deployment affects margins, sales cycles, and overall profitability. This isn't just about having cash on hand - it's about understanding how that capital translates into business growth and sustainability.

For AEC tech startups, especially those in working-capital-intensive segments, this formula provides our framework for evaluating their business health beyond traditional metrics. It helps answer critical questions about scaling strategies and resource allocation. The key is understanding the relationship between working capital investment and revenue generation, particularly in businesses where capital deployment directly impacts service delivery.

More here: https://www.linkedin.com/posts/aecvc_aistrategy-categorycreation-constructiontech-activity-7297289202256302080-4yOl?utm_source=share&utm_medium=member_desktop&rcm=ACoAAA_eMOwBZSjLkRAw_FJQ1BTRRREGKIiyP1g

Knowledge Scaling Trumps Network Growth in Specialized VC Investing

Why Is Deep Knowledge The Only Truly Scalable Asset in VC?

In venture capital, especially in specialized sectors like AEC tech, we've discovered that knowledge is the only truly scalable asset. Networks, while valuable, have natural limits - you can't overwhelm your contacts with constant requests without diminishing the value of those relationships. Similarly, truly transformative investment opportunities are naturally limited in any given fund's lifetime.

This realization has shaped our investment philosophy around what we call "atoms wrapped in projects." It's about developing deep expertise in specific technological areas within the AEC space, understanding not just the technology itself but how it integrates into real-world projects and workflows.

The most effective investors in our space know their limitations and aren't afraid to acknowledge them. This means sometimes saying "I don't know," listening more than talking, and being available as a sounding board rather than pushing unsolicited advice. We've found that founders appreciate this approach - they have far deeper knowledge of their specific domain than any investor ever could.

More here: https://www.linkedin.com/posts/aecvc_aistrategy-categorycreation-constructiontech-activity-7297289202256302080-4yOl?utm_source=share&utm_medium=member_desktop&rcm=ACoAAA_eMOwBZSjLkRAw_FJQ1BTRRREGKIiyP1g

Conclusion:

The construction tech landscape is evolving from a growth-at-all-costs mindset to a more measured approach focused on integration, optimization, and sustainable scaling.

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