Construction Contractors' Venture Capital Shifts Toward Late-Stage Startups

In the venture capital space of the construction industry, contractors behave on the job just as they do on the construction site: they don't chase flashy novelties, but rather adopt proven methods to boost profitability. This strategy is emerging through two trends: contractors are ramping up their own venture capital arms, while also turning their attention to startups that are already commercially ready, rather than those in their early stages.

Take DPR Construction, for example, whose headquarters in Redwood City, California, sits in the heart of Silicon Valley. Its internal investment arm, WND Ventures, has been active since 2015 (according to its LinkedIn page) and has invested in several mature startups, including reality capture platform DroneDeploy, AI-based document tracking tool Trunk Tools, and automated layout robot developer Dusty Robotics (according to the company's portfolio page).

Another contractor seeking to invest in technology companies with a solid track record is Suffolk Technologies, the venture capital arm of Boston-based Suffolk. The firm runs the BOOST accelerator program annually, selecting promising startups to deploy existing solutions on real projects, providing not only investment but also hands-on guidance from the inside out. According to its website, the program has so far covered 30 different startups. Suffolk Technologies' initial investment is $100,000, structured as a post-money SAFE (Simple Agreement for Future Equity), which allows investors to inject capital into a company and determine their ownership stake when the funds convert into shares.

Graduates of the program include San Francisco-based Canvas, which focuses on drywall construction robots. This company, specializing in drywall finishing, completed a $24 million Series B funding round in April 2021, with Suffolk Construction participating in that round. Since then, Canvas established partnerships with drywall manufacturer USG and construction equipment maker Hilti in 2023, and released new robots in 2024.

Additionally, San Francisco-based Webcor is a newcomer to this field—the company announced on November 15 the launch of its investment arm, Webcor Ventures, with the acquisition of a 10% stake in Oakland, California-based modular construction company R2 Building as its first investment. Even New York City-based construction giant Turner Construction has joined the ranks, launching Turner Ventures on March 17.

Understanding funding structures

A startup's funding rounds can be seen as an indicator of its maturity. For example, companies undergoing pre-seed funding rounds can be considered in their infancy, with investors typically being friends and family, supporters, and the founders themselves. Additionally, some companies may never progress beyond the seed round to later rounds, such as Series A. In contrast, companies undergoing later-stage funding like Series A or B are more mature and can attract participation from other large investors; these more mature rounds also tend to attract more capital. One example is Tel Aviv, Israel-based Buildots, which offers AI-driven project tracking solutions. Buildots completed a $45 million Series D funding round in May, bringing its total cumulative funding to $166 million.

In fact, even for a Series A round, a company must demonstrate not only a great idea but also a clear profitability strategy. This differs from seed funding, which is raised by companies to take initial steps, such as defining the final product and target customer base. Taken together, this means that Series A rounds also occur later in a company's lifecycle.

"I think startups are beginning to realize that there is no disruptive transformation in this field," said Dan Laboe, founding principal of Nymbl Ventures. "It's more of a slow transition toward the future." Over the past five years, these companies have matured through the COVID-19 pandemic, international conflicts, and the current economic uncertainty driven by tariffs.

Dan Laboe (Image courtesy of Nymbl Ventures)

Observers point out that over the next five years, companies that invest effort in identifying viable on-site solutions—especially contractors—will encounter new opportunities. Gonzalo Galindo, head of Cemex Ventures, says that companies that make it to Series B have already overcome numerous obstacles. Cemex Ventures is the construction technology-focused venture capital arm of Cemex, a building materials company based in Monterrey, Mexico. "It's a normal business process because many Series B companies have already spent a year to a year and a half trying to raise funds," Galindo said. "Those that are still alive are proving their resilience; they know how to manage their business and finances, and therefore are more likely to secure funding now."

Contractors seeking solutions

In this process, these tech survivors have established a foothold in construction by tailoring solutions to the industry's inherent challenges, such as labor shortages, environmental unpredictability, and cash flow bottlenecks. These challenges can threaten project timelines, whether on the construction site or before project launch. In the current environment, artificial intelligence is the most sought-after technology. Additionally, robotics, software platforms, and physical equipment are also playing significant roles on construction sites.

For example, Providence, Rhode Island-based Gilbane Building Co. used New York City-based Trunk Tools, which tracked approximately 21,000 individual documents on the $456 million renovation project of the Baird Center in Milwaukee, resulting in cost savings. Another company, San Antonio-based Zachry Construction, used Menlo Park, California-based Alice Technologies to accelerate its estimating process, which helped the company save 28 days on a $149 million highway project.

Flow of capital

The broader venture capital landscape is flush with funds—according to Crunchbase data, global venture capital investment reached $321 billion in 2024, doubling over the past decade. However, construction technology accounts for only a small fraction of that—according to Cemex Ventures analysis, the sector attracted only $3.1 billion in investment in 2024, following a significant downturn in 2023. Nevertheless, the construction industry, known for its thin profit margins and conservative reputation, has become a popular target for startups seeking disruption due to its well-known technology adoption gap. Although this gap narrowed during the pandemic, critics point out that due to shortcomings in integrating new technologies, the construction industry still lags far behind other sectors in productivity improvements.

With this in mind, experts say that although the sector is small, it is strong and full of opportunities. "I think 2025 will be a key turning point in truly understanding where technology investment is headed," said Laboe of Nymbl.

Larger players

This is precisely where more mature startups can attract contractors. Laboe says that a mutually beneficial relationship has formed between later-stage startups and contractors: contractors can immediately benefit from commercially ready products while also driving the growth trajectory of the startups. Laboe also notes that if other contractors see a contractor investing in a product, it sends a reassuring signal. "These are long-established industries and players, and earning their trust takes a long time," Laboe explained. "Having a corporate backer provides them with an immediate economic reason to adopt the technology and guide it toward the future."

The role of contractors

So the question arises: how do contractors get involved? And how do they deploy their capital? Atul Khanzode, chief technology officer of DPR Construction, collaborates with WND Ventures to seek new solutions for the company's construction sites. He believes that as long as capital is combined with on-the-ground experience and even experimentation, investment has its time and place. For companies that have already received financial support from strategic investors, WND and other contractor venture arms offer a unique value proposition beyond capital: the contractor's perspective. "They really care about our opinion on the practicality of their technology and want to work with us as early as possible," Khanzode said.

Wan Li Zhu, co-founder and managing director of Suffolk Technologies, offers another analytical perspective. The company's venture arm sits at the intersection of the funding ecosystem, playing the role of an early validator. Zhu points out that some startups arrive with grand expectations. "Many entrepreneurs not from the construction industry may think that since the construction industry has a multi-trillion-dollar market size, there must be substantial technology budgets. But that's often not the case; the fragmentation of the industry is also part of the friction," Zhu noted.

So, what happens next? Experts say the simple answer is more investor capital, especially driven by the AI boom, a trend already visible in the first quarter of 2025. Investors have poured $521 million into AI-based construction technology products, the highest level since 2021. Moreover, these investors seem willing to stay the course—surveys conducted by Burlingame, California-based Zacua Ventures, a construction technology investor, show few are pulling back. Its data shows that 90% of surveyed construction technology investors plan to increase (47%) or maintain (43%) their capital deployment in 2025. "This trend reflects a recovery in early-stage construction tech investment sentiment since the significant downturn in 2022, indicating growing confidence in its long-term potential," the company wrote in its summary of results.

Zhu himself is optimistic about innovation. "I think the next five years will be different from the past two decades in the construction industry," Zhu said.

Correction: Suffolk's BOOST program is an accelerator. This article has been updated to reflect the number of companies covered by the BOOST program.