Looking back at 2022..🚀

As we approach the end of 2022, it is time to review the year we are about to put behind us - both for the ConTech / PropTech ecosystem and for Construct Venture.

For Construct Venture, 2022 has been an eventful year where we met many companies and talented entrepreneurs, invested in 3 new companies, and participated in follow-up investments in our portfolio companies. We have also welcomed new solid investors in the portfolio companies and collaborated with others in new investments. The new companies that have invested in are exciting, innovative companies in which we have look forward to support going forward:

→ Parqio delivers the world's best access solution for communal garages and utilizes the enormous potential found in the free capacity of existing infrastructure 🚗

→ Findable digitizes and automates the collection and sorting of FDV documentation🔍

→ 7Analytics models and predicts natural risks using artificial intelligence ☔️☘️

2022 has been a special year - where the major global macro trends; recession with unstable geopolitical conditions, high commodity prices, logistics challenges, and energy shortages combined with rising interest rates affect venture capital investors and start-up companies. At the same time, our assumption is that within our domain of AEC, we must be prepared for challenging times and tough roofs in the period that lies ahead. The latest measurements indicate that new home sales are slowing down and house prices are stagnating, which creates some uncertainty in the market. The fear is lower initiation, less activity, and a market that will become more difficult to navigate going forward.

But is there capital in the market to fund start-ups going forward? We believe it is. The overlying factors cause capitalization processes to take longer, expectations for valuations / pricing are on the way down because capital is more expensive. The valuation of the company with expected turnover in the future is penalized more severely than established companies. Our experience is that the capital is less loose and that it will be more strenuous and take more effort to raise capital going forward.

Despite this, there is a lot of optimism to be found. As a venture capital investor within AEC over the past few years, we have seen great development in the ecosystem we are a part of - both in terms of (1) the digital maturity in the industry (2) a more complete ecosystem, and (3) an ever-increasing supply of start-ups.

(1)   An increasing digital maturity inthe industry
We have an industry, AEC, which has traditionally invested the least in digitization and innovation, which is becoming increasingly mature to adopt technology and adopt new innovative solutions to be competitive in the fight against low margins and pressured timelines. At the same time, a continuous focus on efficiency and ever-increasing requirements for climate and the environment - with associated certifications - forces a need to adopt new solutions.

At the same time, troubled times can create challenges for start-ups if there are fewer projects available and less activity in the industry. On the other hand, one should not underestimate the effect of a "good crisis" where corporates have to become more efficient and innovate, which can open up exciting opportunities.

(2)   A more complete ecosystem
Our goal is to help develop and scale our portfolio companies from promising businesses to established growth companies, preferably world leaders in their field, together with entrepreneurs and co-investors - where we are completely dependent on a healthy and good ecosystem. In recent years, a very solid ecosystem has developed that fosters an increasing number of investment opportunities - where you have actors such as StartupLab that has been a prominent actor for many years, where later Antler has come up at record speed and helps to put innovation into practice that creates exciting new companies. In addition, there are actors such as PropTech Norway, MESH, Shifter, etc who contribute to creating a vibrant community. Combined with this, it is growing and further professionalizing on the investor side with new VC funds, new CVCs, and other professional investors, "family offices", which are constantly looking towards earlier phases to invest which provide a fantastic starting point for building out growth companies from Norway.

We find that more and more investors are curious about start-ups that focus on AEC. With the size of the market and the global impact we assume that the influx of investors will continue to increase in the future, both with national and international investors.

(3)   Increasing supply of start-ups
We have traditionally only invested in companies related to AEC due to our sector-specific focus, which distinguishes us from more traditional VCs. But in recent years we have seen an exciting turn where verticals such as mobility, energy, real estate, and infrastructure are constantly intersected and linked more closely together - which also expands our investment universe.

There is an ever-growing field of start-ups, where we see that the number of financing rounds in early stages and growth companies is increasing within most segments - and there has been a marked increase among companies that manage to carry out issues of over NOK 15 m.

When we established Construct Venture, we were unsure whether the scope and influx of start-ups within our domain were large enough. We no longer have any doubts about that. It seems that more and more entrepreneurs are seeing the potential and opportunity in one of the largest global industries with an associated gigantic market. According to guru Kjetil Holmefjord, ConTech / PropTech was overall the niche with the second most investment rounds in 2021, with only FinTech at the top of the list, which testifies to a high level of activity.

PropTech has been high on the agenda in recent years, with a steady supply of companies and great competition, where Spacemaker became an early leading star. There is still good growth here with exciting start-ups such as Parqio,  Plaace, Unloc, AirThings, Defigo, Keyfree, Unite Living, Autility, Again X, Arealize, Laiout and Paralello.

Within ConTech, we experienced that there was less funding at the start, but where a lot of exciting things are really happening at the moment. Construction is one of the industries that has still come relatively short in its digital transformation. This opens up great opportunities for creating future winners - and we won't be surprised if you find it among some of these players such as Findable, Vixel, Sensor Innovation, Dalux, Consigli, Scaled Robotics, Next, Sparkel, Deton, Nlink, Bygr, Svenn, Catenda, Ditio, Rebartek, Modulize, Kvist, Tørn, Minuendo, 7-Analytics, Proptly or Novorender.

We have no doubt that 2023 will be an exciting year - with new opportunities for growth and progress, but also some snot and tears. We expect to see companies extend their runway as much as possible with a hard-hitting focus on commercialization, perhaps earlier than expected.

Merry Christmas and a Happy New Year from us in Construct Venture 🎄