Embed Size (px)
Citation preview
1
Real Estate, Property & Construction Tech Unicorns
The Real Estate, Prop Tech and Construction Tech segments are growing rapidly
– disrupting some of the world’s largest markets – larger than healthcare.
Many start ups are becoming a Unicorn in 1.5 – 3 years.
Current Problems in Real Estate and Construction
The construction industry suffers from great inefficiencies and low productivity gains1.
A 2018 report by JLL states2:
“Construction technology investing - coincides with an industry plagued by cost fluctuations, labour shortage issues and overall lack of productivity improvements
– creating what many VCs view as a Prime Opportunity for Disruption”.
o Productivity has declined to 1968 levels1
o US construction spending $ 1.32 trillion last 12 months
o Material costs are increasing rapidly2
o Extreme shortages of skilled construction labour
o Wages increasing rapidly
o Construction costs more than doubled since 20003
VC Investments in PropTech7
2
The Solution
Start ups are attacking diverse areas, from management to equipment & materials purchasing.
Real Estate Tech has seen a surge in mobile & cloud technologies, AI & robotics and AR/VR.4
o Property Tech – real estate, property, portfolio and home services management
o Construction Tech – 3D printing & injection, prefab, offsite & modular manufacturing, robotics, CAD and BIM
Why Real Estate Tech?5
o Market size – US real estate > 13% GDP, housing market valued $31.8 trillion
o Annual Construction $10 trillion
o Foundations for success: the sector has created world’s most talked about unicorns
Property Tech
The fastest growing area of investment by VCs.6
o In 2017 investments in start up PropTech hit $12.6 bn7
o 92% increase in global PropTech investments
o Largest year in real estate tech history
Construction Tech
Is designed to increase productivity and profits of construction.
“Real Estate Investments - Currently do not address the systems-level problem
we have of undersupply of social housing”
- Matt Hoffman, VP of Innovation, Enterprise Community Partners
3
Construction Tech start ups see record exits in 2018
16 Successful exits already this year8 13 M & A and 3 IPO’s
The $10 trillion p.a. construction industry is ripe for disruption.
VCs invested $1.6 bn in construction tech start ups in Q1-Q3 2018.9
Funding increased by 60% from 2017.8
Modular Construction
Start ups are seeing the most funding in the construction tech space10.
Latest Innovations in Construction Tech
Offsite: Modular and Prefabricated
4
The Amazon of Construction Tech is Coming …
As of yet there is no entrant in the market with technology to improve actual construction. All of the offerings are around ancillary services designed to save a few percent of the process. We have not yet seen the tip of the iceberg:
“When companies use robotics and machinery to manufacture buildings on automated production lines.”
- “Like the automotive industry - tens of thousands per year…”
Decacorn Time…
The startup that has technology to automate building manufacture cheaper and faster than before will probably become the first Decacorn.
They will exploit every tool and technology available in addition to developing their own.
Developing new processes and workflows
- All optimised by AI
Labor is typically 55-60% of the cost of a house and materials only 40-45%.
Automation and machinery that manufactures with minimum manual labor will
Reduce direct costs by 40-50%
(amortisation of manufacturing tech is typically over 7-10 years & very large production runs).
RDA is the only company with IP and Tech to
• Reduce Construction Labor by 90% • Reduce Construction Costs by 40% • Reduce Construction Time by 75%
IP and Tech designed from day 1 for extreme scaling
• 10,000 houses / 100 warehouses • 50 schools / 10 hospitals • per factory p.a. • 4 new factories per year
5
Digital Twins
Digital Twins are a new technology – a complete functioning digital version of the factory with all production parameters programmed in detail. Not just a 3D simulation. They are used for detailed scenario analysis and optimising of the production facilities.
- A few steps beyond traditional ERP. Companies cite 30% productivity increases, by optimising their digital twin - before building a new production plant. Not surprisingly they are a foreign concept in construction.
- Very few construction companies in the world have any automation.
- Those few that do are not technologically advanced enough to build a digital twin
- Optimising a digital twin of their production facilities is beyond their remit. Gartner predicts
“By 2021, half of large industrial companies will use digital twins, gaining a 10% improvement in effectiveness.”
Deloitte states
“Organizations seeking to boost innovation and business performance should explore the transformative insights that Digital Twins can deliver.”
We expect the future decacorns of real estate tech to use every technology available to gain productivity increases of an order of magnitude. RDA uses AI, specifically Genetic Algorithms and Neural Networks to optimise their digital twins. For all manufacturing, digital twins forms the cornerstone of that productivity increase. AI optimisation of the production facilities before a lease is even signed can improve factory productivity by over 50% in cases. It shows in detail the optimum layout, number of machines, total sizes and dimensions of
1. Goods in 2. Raw materials space and quantity requirements 3. Manufacturing / production 4. Finished goods out, space and layout
6
Unicorns - Construction Tech
Katerra (2015)11
o A similar construction tech start up o Unicorn 2 years 1 month o $1.1 billion in funding o $1.3 billion order book in first 3 years o Current valuation over $3 billion
Uptake Technologies (2014)12
o Predictive analytics platform for construction o Unicorn 1 year 3 months o $287m in funding o $2.3 billion valuation Nov 2017
Procore Technologies13
o Project Management Construction Software o Unicorn Dec 2016 o $229 million in funding o Doubled valuation to $1 billion in less than 1 year
Desktop Metal (2015)14
o 3D Metal printing o Unicorn 1 year 9 months o $277 million in funding o $1.2 billion valuation Aug 2017
Revolution Precrafted (2015)12
o Architectural services o Unicorn 1 year 10 months o $1 billion valuation Oct 2017
Zhaogang 12
o Construction Materials trading platform o $379 million in funding o $1 billion valuation June 2017
Aconex 12
o Construction collaboration software o Oracle acquired for $1.2 billion – Dec 201715
Viewpoint12
o Construction management software o Trimble acquired for $1.2 billion – Apr 201816
7
Unicorns - Property Tech12
OpenDoor Labs (2014)
o Real estate online market place o Unicorn 2 years and 8 months o $320 million in funding o $2 billion valuation Sep 2018
Compass (2012)
o Global real estate platform o $1.2 billion in funding o Unicorn Aug 2016 o Current valuation $4.4 billion
Homelink (Lianjia) o Real estate platform o $3.4 billion in funding o Current valuation >$6 billion
SMS Assist
o Multi-site property management o $225 million in funding o Unicorn June 2016
e-Shang Redwood (2016) o Logistics real estate developer and operator o Unicorn in 1 year o $2.8 billion valuation Jul 2017
Redfin
o Tech-powered real estate brokerage o $209 million in funding o $1.9 billion valuation Jul 2017
Trulia
o Property buying platform o Zillow acquired for $3.5 billion – Jul 2014
*Only a few examples of some of the Unicorns in PropTech.
8
Construction Tech - Unicorns in the Making12
Blu Homes
o Platform to build premium pre-fab homes o $197.5 million in funding o Last valuation $537 million 2013
Project Frog o Pre-fab building kits to make energy-efficient buildings o $93 million in funding
PlanGrid
o Mobile construction app o $66 million in funding
Flux Factory
o Construction collaborative design software o $39.3 million in funding
Smart Equip
o Web-based procurement o $13.6 million in funding
"Delivering projects on time and on budget are the highest strategic imperatives
for any engineering and construction organisation"
- Mike Sicilia, VP of Oracle Construction and Engineering16
9
Property Tech Investments17181920
Metaprop interviewed prominent PropTech investors 201821
Currently more interest in early-seed start-ups
o 46% of investors plan for Pre-Seed stage o 75% of investors plan for Seed stage
JLL Spark
2017
- $100 million investment fund18 - Aimed at real estate tech
Concrete Joint Venture
2017
- JLL , SeedCamp, Starwood Capital19 - Identify potential in PropTech seed investments
Brookfield Asset Management
2018
- Plan to invest up to $300 million20 - Disruptive tech for real estate, infrastructure
Varde Partners
2018
- Invested in Pi Labs21 - Focus on scaling up early-stage PropTech firms - Proven record for investment in Unicorns
“Things are going to change in terms of types of PropTech investments
- We are now looking into sectors like energy, material sciences, and robotics”
PropTech Investors Stages of Interest
- Investor Statement, Metaprop Report 201822
*Source: Metaprop Report Study 2018
10
Construction Tech Investments
Softbank’s Vision Fund - $100 billion launched 201722
o Billions of capital to PropTech and Construction Tech start ups o WeWork $4.4bn, Katerra $865m, Compass $450m, OpenDoor Labs $400m o All rapid Unicorns
Enterprise Community Partners23
o Largest affordable housing developer in the US o Plan to invest heavily in early stage construction tech 2019 o For Housing Affordability
Y Combinator - largest seed investor in construction tech12
o Boast portfolio of 9 construction tech start ups o 500 Accelerator follows with 8 construction tech investments
“ConTech becoming the new PropTech
- The construction industry is even slower to move than real estate
- Hasn’t fully capitalized on the potential of technology to revolutionize their business”
- Investor Statement, Metaprop Report 201822
“The strategy is to invest in companies that are going to yield venture-like returns
- when we’re taking venture-like risks”
- Matt Hoffman, VP of Innovation, Enterprise Community Partners24
11
References 1. Market Watch Mar 2017 The construction industry has a productivity problem - here’s how to solve it marketwatch.com/story/the-construction-industry-has-a-productivity-problem-and-heres-how-to-solve-it-2017-03-04 2. Jones Lang LaSalle 2018 The State of Construction Technology jll.postclickmarketing.com/Global/FileLib/Construction_Technology_Report/The_state_of_Construction_Tech_-_2018_-_JLL.pdf 4. Progressive Policy Institute Oct 2017 Soaring Construction Costs Threaten Infrastructure Push progressivepolicy.org/issues/transportation-infrastructure/soaring-construction-costs-threaten-infrastructure-push/ 5. CB Insights Jan 2018 Building Blocks: 100+ Startups Transforming The Construction Industry cbinsights.com/research/construction-tech-startups-market-map-expert-intelligence/ 6. Forbes Jun 2018 Why Venture Capitalists Are Investing Billions Into Real Estate Technology forbes.com/sites/forbesrealestatecouncil/2018/06/27/why-venture-capitalists-are-investing-billions-into-real-estate-technology/#1d622ab078ac 7. Jones Lang LaSalle Jun 2017 In search of the first proptech unicorn ceoblog.jll.eu/search-first-proptech-unicorn/ 8. Real Estate Tech 2017 Global Analysis of VC Investments in Real Estate Tech retech.net/trends/real-estate-tech-annual-report-2017 9. CB Insights Oct 2018 If You Build It: Construction Tech Startups See Record Exits cbinsights.com/research/construction-tech-exits-trends-expert-intelligence 10. BIM Plus Jul 2018 Billion dollar business: Venture capital piles into construction technology bimplus.co.uk/news/billion-dollar-business-venture-capital-piles-cons
12
11. CB Insights Aug 2018 Construction Tech Financing Continues Its Record Run, Despite Challenges At Katerra cbinsights.com/research/construction-tech-financing 12. Wall Street Journal Oct 2018 Construction Tech Startups Drawing Investors wsj.com/cio/2018/10/02/construction-tech-startups-drawing-investors 13. Company data search engines: GrowthEnabler growthenabler.com CB Insights cbinsights.com/research Pitch Book pitchbook.com Crunchbase crunchbase.com 14. Forbes Sep 2018 How Procore Built The Cloud’s Hottest Unicorn By Bringing Software To Low-Tech Construction forbes.com/sites/alexkonrad/2018/09/12/how-procore-built-the-clouds-hottest-unicorn-bringing-software-to-low-tech-construction-sites/#2792c8ca575a 15. Forbes Sep 2018 The Next Industrial Revolution: How a Tech Unicorn’s 3-D Metal Printers Could Remake Manufacturing forbes.com/sites/amyfeldman/2018/09/27/the-next-industrial-revolution-how-a-tech-unicorns-3-d-metal-printers-could-remake-manufacturing/#584a33513bea 16. Financial Review Dec 2017 Oracle buys Aconex for $1.6 bn afr.com/technology/oracle-buys-aconex-for-16b-20171217-h06adn 17. UK Tech News Jun 2018 JLL Spark launches venture fund to invest $100m in PropTech startup uktech.news/news/jll-spark-launches-venture-fund-to-invest-100m-in-proptech-startups-20180605 18. JLL Mar 2017 JLL forms alliance with Seedcamp and Starwood Capital Group to launch Concrete proptech initiative jll.eu/emea/en-gb/news/747/jll-forms-strategic-alliance-with-seedcamp-and-starwood-capital-group-to-launch-concrete-proptech-initiative
13
19. Wall Street Journal Apr 2018 Brookfield’s New Venture-Capital Unit Eyes Real-Estate Tech Startups wsj.com/articles/brookfields-new-venture-capital-unit-eyes-real-estate-tech-startups-1524567602 20. City A.M. Feb 2018 $13bn investment firm Varde Partners taken a stake in London proptech startup funder Pi Labs cityam.com/266784/13bn-investment-firm-varde-partners-has-just-taken-stake 21. Metaprop NYC 2018 Mid-Year 2018 Global PropTech Confidence Index metaprop.org/confidence-index 22. Financial Times Jun 2018 SoftBank: inside the ‘Wild West’ $100bn fund shaking up the tech world ft.com/content/71ad7cda-6ef4-11e8-92d3-6c13e5c92914 23. Bisnow Oct 2018 Enterprise Community The Latest Real Estate Player To Become VC Investor In Tech bisnow.com/national/news/technology/why-more-real-estate-companies-are-becoming-venture- investors-in-tech-startups-94167
