Jit Kee Chin, Chief Data and Innovation Officer, Suffolk
Despite economic challenges, the construction technology sector remains an area ripe for an investment opportunity. Across the industry, increasingly complex projects paired with relatively low use of digital technologies have led to the need for a more efficient, smarter way of building for a more digitally savvy generation.
Construction has long been one of the slowest sectors to adopt new technology, often failing to embrace digital solutions that need up-front investment resources to deliver long-term results. However, new COVID-related considerations are expected to increase technology use in the industry at a significantly faster pace. A recent study conducted by McKinsey & Company predicts that the aftermath of the pandemic will expedite the adoption of new digital tools and technologies across the industry.
With social distancing required for the foreseeable future to prevent transmission of the virus, builders must find remote alternatives for in-person worksite collaboration, in addition to the need for boosting overall productivity. This presents an opportunity for builders to proactively shape new innovative industry standards by taking digital building solutions into their own hands.
One way for builders to prepare for this rapid digital transformation is by making strategic investments in technology companies equipped to make real change in improving safety, collaboration, efficiency, and productivity. There’s a precedent for this. In the years following the financial crisis of 2008, construction companies that were proactive in making key investments in digital technology and productivity came out ahead of their competitors.
Forming solid partnerships with these startup companies will help builders expedite economic recovery while shaping the future of the industry by creating digital solutions that can propel forward the ability to build better and smarter
New and sophisticated solutions are frequently being introduced by small startup companies and entrepreneurial ventures that may not have the available resources to advance research and development. By bringing those companies into the fold on the front end, builders can form lasting partnerships that align long-term interests and fuel innovation to develop new ways of approaching the construction process.
Builders can no longer take a siloed approach to delivering results. As technology continues to move forward at a rapid pace, the industry requires far more overlap between players. This vision of long-term, solution-driven investments aligns directly with Suffolk’s overarching diversification strategy unveiled earlier this year.
Suffolk’s strategy calls for expanding services beyond core construction capabilities into vertical service lines, creating an end-to-end business capable of delivering on our value proposition of investing, innovating, and building. We have formalized the investment piece to create Suffolk Capital Technology Fund – our corporate venture capital arm that seeks to fund technology solutions across the building lifecycle. Specifically, we prefer to work with entrepreneurs who have big ideas and the potential to achieve a scalable impact.
We’ve seen first-hand a number of these collaborations go onto produce groundbreaking results for the industry. Our inaugural investment partnership was with image analysis firm Smartvid.io, who worked with us to shift our existing safety management system into Suffolk’s award-winning safety app, RiskX, by way of artificial intelligence and machine learning capabilities. Suffolk was also an early user of Procore construction management software, which has since gone on to become a widely-used project collaboration tool for millions of users and filed an S1 with the SEC for an IPO immediately prior to COVID.
As we become more integrated into the tech investment space, we’ve recently partnered with Open Space, a 360-degree camera solution seeking to shift the record of truth on construction sites from written words to visual images that can serve as documentation of the project from start to finish. During the pandemic, Open Space’s adoption has been expedited by many contractors, allowing for project team members and trade partners to virtually share progress that allows for more efficiency and lower costs. Their success is evidenced by a successful Series B raise amidst the pandemic.
As the industry looks ahead to incorporating new technologies into the building process in the post-COVID environment, it’s about more than just the latest gadget – it’s also about the ecosystem of people who are driving the industry’s innovation forward. Forming solid partnerships with these startup companies will help builders expedite economic recovery while shaping the industry’s future by creating digital solutions that can propel forward the ability to build better and smarter.