The construction-themed VC Foundamental has raised $85 million for its second fund to increase its stockpile of dry powder for innovators in what it sees as a $12 trillion market opportunity.
The second fund vintage brings Foundamental's total AUM above $150 million, draws on "global" construction and building LPs, and can be expected to further extend the VC's built environment coverage, particularly in emerging regions such as Latin America.
Foundamental's figures point to a 23% decline in construction productivity since 1990, despite the sector being responsible for employing of 1 in 14 workers globally, and 10% of worldwide GDP.
The portfolio from its first fund is generating hype on the back of its aggregate $5.4 billion valuation, three exits (including the unicorn-valuation InfraMarket), and seven further companies Foundamental says have cleared a $100 million+ run rate. In the past three years the portfolio amassed more than $1.2 billion in venture capital. Some 81% of its investees subsequently clinched follow-on fundraises.
Among the exits is the fabrication intelligence provider Indus.ai, sold off to construction management software player Procore, as well as HoloBuilder, a VR-enabled building site visual capturing tool.
Foundamental's construction tech specialty spawns innovation across the globe, with its three general partners posted to bring deals back from North America and APAC, as well as from Europe.
Plays like India-HQed InfraMarket are joined by others across Asia-Pacific and North America, for instance the Indian digital freight forwarder WizFreight (whose series A was led by Tiger Global Management) and Californian heavy industrial equipment automation retrofitting startup SafeAI (backed by civil engineering player Obayashi.)
Foundamental's strategy garners further relevance given that the green evolution of our cities and industries will rely heavily on novel construction methods, as the deadline for averting disastrous climate change draws nearer.
And the best "lever" to decarbonise our societies may well stem from the construction sectors according to Adam Zobler, one of Foundamental's three general partners, responsible for North American dealmaking.
Zobler said: "There's a huge sustainability incentive, too. Construction is responsible for 17% of global emissions."
The importance of buildings is not new. Throughout the ages their making has shaped humanity's quality of life.
Yet Foundamental thinks there's more room for venture funds to drive future cohorts of construction innovators, expanding the already significant number of IT-driven built environment categories, field worker tools and business-end software.
Zobler concluded: "Adjusting how we engineer, which materials we use, and how we organize supply chains could mean a 10x improvement. As ever, innovative startups are likely to be leading in this field.”
"The time to invest is now. Technology that fundamentally reshapes the world of construction and the built environment is needed now more than ever -- and it can drive great returns -- but is currently underserved and underfunded.”