The construction sector is notorious for its slow embrace of technology. But a new venture capital firm, backed by some legacy construction heavyweights, is set to change that.
Zacua Ventures has launched its $56 million seed fund aimed at early-stage construction technology startups, backed by 19 of the largest companies in the construction sector. The group of limited partners includes Procore, a provider of construction management software. Volvo, maker of trucks, buses and construction equipment; and sustainable building materials company, Cemex.
Vivin Hegde, Mauricio Tessi Weiss and Juan Nieto started San Francisco-based Zacua in 2022. Hegde was previously with construction tool maker Hilti Corp, while Tessi Weiss and Nieto were with Cemex Ventures.
Because the construction industry is dominated by small and medium-sized companies, technology adoption is “very fragmented,” said Tessi Weiss, who represents the European Union and Latin America for Zacua. Finding startups that can tackle this is one of the challenges, but also a big opportunity, Weiss believes. While many of these companies have digitized paper processes, “today we are seeing the technology take off in many different areas such as, AI, manufactured construction, IoT devices and robotics.”
With this shift has come more startups developing solutions. Most recently, Kleiner Perkins led a $31 million series in PermitFlow, which aims to “build the ‘TurboTax for construction permitting.’ last week by a group of investors, including Precursor, to tackle one of the industry’s biggest problems with late payments.
Since the construction industry represents approx 14% of world gross domestic product and is responsible for producing 40% of the world’s total greenhouse gas emissions, Zacua targets startups dealing with sustainability as well as productivity and urbanization, said Tessi Weiss.
The venture capital firm’s partners, who also have a regional presence in Spain, Mexico and Singapore, are looking for start-ups within these three buckets that will, for example, boost efficiency in the construction industry. reduce the carbon footprint of construction and building operations more broadly; and help develop resilient, intelligent structures that are ideally equipped to serve the cities of the future, said Hegde, who represents North America.
Since launching its fund, Zacua Ventures has invested in more than a dozen startups across the manufacturing technology ecosystem. Among its portfolio companies is Construex, an Ecuador-based software-as-a-service marketplace for the construction and design industries. Most recently he led a $9 million seed round in Flexnode, a data infrastructure startup.
“Raising a $56 million fund for the first time in this kind of environment is something we haven’t seen many people do, and the fact that we were able to do it, and in a specific area, just speaks to the opportunity that lies ahead,” Hegde said.
