Some of the big US themes to watch out for in Constru- and AEC-Tech in 2024:
Alternative supply chains
Automating the workforce
Vertical AI applications
Startup acquisition wave
Questionable materials science?
Alternative Supply Chains
"You're starting to see a lot of reshoring and unshoring and a lot of resources predicated from the government to make that eventuality," says Adam about efforts to find alternative supply routes from Latin America. He explains that COVID exposed fragility in relying too heavily on Asia, so now there's a major push towards supply chain localization. Adam sees opportunities in identifying substitutable construction materials and components from Latin American manufacturers. The US government is also incentivizing reshoring production.
Automate the Workforce
"We're really forced to figure out how to get around this very bleak future of creating the most complex projects with least experienced individuals," explains Adam regarding the need for automation to address labor shortages. He predicts that over the next ten years, up to 40% of the current construction workforce will retire. And meanwhile, new entrants are sorely lacking to replace them. This combination of an aging workforce and lack of skilled labor creates massive problems for delivering sophisticated builds. Adam sees robotics, autonomy, 3D printing, and full-stack automation as key solutions to fill gaps as humans exit.
Vertical AI Takeoff
"I think vertical SaaS will be rebranded to vertical LLMs," predicts Adam on the potential of customized AI models for construction tech workflows. He believes that companies in AEC are sitting on treasure troves of historical data that can be leveraged for vertical AI apps. If startups can take proprietary data like 50-100 years of plans, bids, designs etc. and train customized LLMs, the output could drive step changes in optimization, predictions and decision support across the build lifecycle.
Acquisition Wave Coming
"It's either make or break in my opinion," says Adam on the need for large firms to acquire top startups in the next two years before they scale too large. He sees parallels to the search wars, where Yahoo missed the boat on buying YouTube and Facebook, precipitating its downfall versus Google. Adam thinks AEC incumbents are facing similar 'innovate or die' choices - whether to acquire category leading startups now, or become increasingly irrelevant versus the innovation curve.
Material Science Grifters vs. Geniuses
"You definitely find, you've ever gone with a kid when you go hiking and you pull up some rocks and you never know what kind of insects or bugs are going to be jumping at you?" jokes Adam on questionable solutions emerging in the material science arena. Both he and Patric bemoan the amount of "crazy unscientific" material innovations getting funding and how the true geniuses in materials science get hurt by pretenders. They agree overhyped technologies with unproven capabilities have attracted investor enthusiasm. But too many solutions lack viability or scientific rigor around meeting sustainability and performance claims.
US Leads, Global Wins
"Foundamental has more surface area, meaning we have more, we have three sandboxes to play in, whereas others only have one," notes Adam on the value of combining insights across the US, Europe, and other markets to accelerate innovation. He highlights how Foundamental’s global fund approach allows sourcing the best founders, opportunities and companies regardless of region. Adam also explains how their worldwide LP network helps with diligence, expansion planning etc. for startups. And by pooling learnings, Adam explains how Foundamental can give better advice to founders on how to shortcut pitfalls based on examples seen around the world.
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Keywords: construction tech, AEC, automation, robotics, AI, LLM, supply chain, reshoring, workforce shortage, material science, sustainability, acquisition, startups