Investors are signaling a renewed focus on the contech ecosystem, even as total funding dipped in 2024. According to BuiltWorlds’ Annual Venture & Investment Report, the sector saw $14.9 billion in investments last year, marking a 22% decrease from the $19.2 billion seen in 2023. However, the number of deals rose to 604, up from 558 the previous year, indicating a robust appetite for innovation in the built environment.
The uptick in deals, despite a global venture capital (VC) climate hampered by high interest rates and suppressed exit activity, suggests that construction technology may be decoupling from broader macroeconomic influences. “It is possible that for the first time since 2019, investment decisions were not significantly driven in some way by macroeconomic impacts,” said Tyler Sewall, BuiltWorlds senior director of research. This shift is underpinned by strong U.S. construction spending, bolstered by the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, alongside increasing European construction output.
However, the investment landscape varied significantly by region. The U.K., for instance, saw an 86% year-over-year drop in activity, as local investors grapple with substantial headwinds. Yet, VC funding in the area remained high relative to the rest of the world, indicating a complex and evolving investment environment.
BuiltWorlds categorizes contech VC firms into three segments: construction technology, building technology, and infrastructure technology. Construction technology, which includes software solutions, tools, equipment, and robotics for project execution, saw a 32.9% increase in funding year over year, totaling $2.3 billion in 2024. However, deal activity in this category declined slightly, with 137 VC funding rounds compared to 145 in 2023.
In contrast, the building and infrastructure sectors saw less money but more deals. Infrastructure tech, in particular, buoyed much of the growth, driven by interest in energy infrastructure and government funding. The sector witnessed an influx of deals, thanks to increased competition between private equity-backed rollup plays and strategic tuck-in acquisitions, with 88 built environment tech M&A deals completed in the last year.
The trends observed by BuiltWorlds align with findings from Cemex Ventures, the contech-focused VC arm of Monterrey, Mexico-based building materials firm Cemex. Their recent annual report highlighted a decline in funding for segments like robotics, supply chain logistics, and environmental tech, while artificial intelligence emerged as a standout winner.
This evolving investment landscape is set to reshape the construction industry significantly. As more deals are struck, and technologies like AI gain prominence, we can expect innovative solutions to emerge, driving efficiency, sustainability, and productivity across the sector. The contech ecosystem is not just weathering the storm of economic headwinds; it’s adapting and innovating, setting the stage for a more resilient and forward-thinking industry.
