The world of construction startups is buzzing—and for good reason. With the industry facing more pressure and complexity, fresh ideas and new technologies are more critical than ever.
Still, with so many digital tools out there, how do we know which ones are worth investing in? And who's guiding these startups as they try to disrupt such a complex industry?
The answers to these questions are crucial as more startups enter the field.
That's why I'm so excited for today's episode, where we’re looking at construction tech through a lens we haven't explored on Digital Builder before: the VC perspective.
I sit down with Alice Leung, Principal at Brick & Mortar Ventures—the first VC fund focused entirely on AECO tech—to talk about what makes a startup investable and how innovation takes hold in the field.
We discuss:
Our conversation kicks off with a discussion about how the construction tech ecosystem has shifted over the last few years.
"Six years ago, it was very different from today. Back then, it was a case of solution scarcity. There were a lot of contractors looking for technology, but there were only so few startups or technology companies," recalls Alice.
"Fast forward to today, and we're seeing exponential growth. That's because software is just getting easier and easier to build. And some of these revenue numbers are growing so quickly as well. So it's definitely a very interesting time."
As for how Brick & Mortar Ventures finds startups, Alice says the firm gets a lot of inbound interest from founders doing their homework, as well as connections from other venture capitalists who tap Brick & Mortar for industry expertise.
There's also Formwork Labs, an accelerator program by Brick & Mortar Ventures and BuiltWorlds, which helps construction tech startups refine their solutions, validate market fit, and connect with potential customers.
"That's another way for us to get access to some of these early-stage founders who are looking to either learn more about construction tech or find a program to supercharge their growth."
A tech startup can build the most advanced and intuitive solution, but if the industry isn't ready for change, progress will stall. The hard truth is that even the best tools can't fix a system built on misaligned interests.
As Alice points out, "It fundamentally comes down to the way our industry and supply chain are set up. There's a culture around the lack of transparency."
She mentions the phrase "mystery is margin" and how it perfectly sums up the situation the many construction pros are in.
"At the end of the day, they have to make money for their company. Pricing transparency doesn't work because people are not incentivized to do that. The incentives may never align, and technology is not going to be helpful until we change either contracting methods or have the older generation retire."
"That's some of the challenges that tech companies must navigate. It's all of those cultural things that may take 10, 20 years to change."
Another significant challenge for startups? Finding customers and industry pros to connect with.
"The number one request from any startup that we talk to is access to customers. That could be access to folks for feedback, pilot projects, etc."
As a VC, Brick & Mortar supports the startups in its portfolio by making introductions. That being said, Alice also emphasizes the importance of understanding the full context of construction decision-making, which is something that Formwork Labs is designed to support.
"A big part of that program is getting these startups talking to not just who they think their initial customer is, but the entire supply chain. Because if you're building a product for the GC, chances are, you may need to be collaborative with the owner or the trade contractor. So, we always try to encourage startups to talk to as many folks as possible. If you're solving a big problem, that problem very likely exists across the entire supply chain."
Now, let's flip to the other side of the equation. If you're an industry professional who wants to connect—perhaps even invest—in startups, where do you begin?
To that, Alice says: just reach out.
"I would be more than happy to introduce whichever construction professional that wants to do that. Feel free to reach out to me; you can find me on LinkedIn.”
Alice gets excited when construction folks step up to support the next generation of innovators. And in some cases, these early connections evolve into something more—like angel investing or advisory roles with equity upside.
"There's a lot of different reasons as to why construction industry professionals would want to work with the startups. And with a lot of these startups, there is opportunity to either invest or become a part of that company for upside."
Getting value for your time
Whichever way you decide to work with a startup, Alice stresses the importance of getting value or compensation for your time and effort.
"If you're working with a startup and they see value in your time, please make sure that you're properly compensated, whether it's with stock or monetary."
She cautions that too many construction professionals have poured time, insight, and passion into early-stage startups—only to be left empty-handed when those companies eventually exited or IPO'd.
Shifting the conversation back to technology, Alice believes that one of the most significant areas of opportunity for construction startups today is robotics.
That's because labor remains one of the industry's biggest constraints—and robotics can open the door to rethinking how we build.
"The cool thing about robotics is we almost no longer have to think about construction that needs to be constructed by humans. If you think about it, the size of sheetrock is 4 x 8 because it's a size that's convenient for humans to move. But imagine we have superhuman humanoids or robotics that can transport larger sheets.
She continues, "There's just so many things that they could do. So you almost have to sit back and look at the industry from a high level, and it's like, 'Okay, if the human body no longer constrains us, how do we optimize the building process?'"
What about AI?
As for AI, Alice acknowledges that many fascinating things are happening in that realm. However, the landscape is still unpredictable and flooded with small-point solutions that are difficult to scale.
For her, incumbents are in the best position to win because they can layer AI onto their existing products without requiring customers to switch platforms or re-train models on proprietary data.
Alice also brings up the volatility of the AI landscape. She points out: "It's a bit risky to do some bets in that space. We're actively looking at AI companies, but we've also been pausing here and there because with every new OpenAI release, there are thousands of startups that die."
Digital Builder is hosted by me, Eric Thomas. Remember, new episodes of Digital Builder go live every week. Listen to the Digital Builder Podcast on:
