Role Of Corporate Venture Capital in Advancing Innovation in the Construction Industry

1. What are the biggest trends and challenges in the innovation and technology landscape for the construction industry today?

The rapid advancement of technology and widespread availability of inexpensive IoT devices have enabled construction sites to collect massive amounts of data in recent years. Despite the abundance of information, a fragmented and non-interoperable data landscape has emerged, making it challenging to derive meaningful insights and take action. To tackle this challenge, the industry must prioritize standardization to ensure data interoperability. By doing so, AI can be leveraged to analyze the data and drive actionable results, unlocking the full potential of the data being captured. 

Consider a recent construction project where two innovative startups implemented cutting-edge technology to capture and track data. The first startup utilized digital badges embedded with RFID, BLE, and other tracking technologies to monitor the workforce, while the second deployed 360-degree photo capture technology to track construction progress. Despite the success of these technologies in capturing data, the project team struggled to make sense of it and turn it into actionable tasks. 

Now imagine if this data was standardized and interoperable. The project team could not only track progress but also understand which trade was responsible for specific tasks, the timing of those tasks, and the manpower required. This level of insight would lead to more streamlined workflows, improved collaboration, reduced waste and costs, and increased efficiency and productivity. The standardization and interoperability of data have the potential to unlock a wealth of valuable insights and benefits.

Another trend in the industry is that owners are seeking the freedom to choose their technology platforms and choose technologies that align with their specific needs. A one-size-fits-all approach does not work for every owner, and they don't want to be tied to expensive contracts with one company or pay for services they don't use.

The ideal solution is the ability to integrate modules from multiple technology providers that work together seamlessly. This presents a great opportunity for startups, as they can focus on developing their core competencies while ensuring simplicity, ease of use, and most importantly, interoperability. By making their products interoperable with other technologies, startups can ensure a smoother adoption process and eliminate resistance from owners, who are often hesitant to adopt new products.

2. How does Hensel Phelps’ CVC firm ‘Diverge’ helping to address the challenges that you mentioned and how will you measure the impact of these efforts?

At Hensel Phelps, we firmly believe that collaboration between GCs, startups, academia, and VCs is the key to solving industry-wide problems. Our recently launched CVC 'Diverge' plays a crucial role in this effort.

We have established a cutting-edge 26,000 sq. ft. innovation lab that will provide a collaborative environment for startups to develop and refine their solutions. The startups will have access to subject matter experts who have extensive experience in the construction industry as well as the opportunity to gain hands-on experience by visiting job sites, receiving live feedback from end-users, and understanding real-world problems.

The innovation lab will provide the startups with exposure to not only our team, but also to our partnering GCs, VCs, and research institutes. This will not only help startups to avoid costly mistakes and develop solutions that are relevant to end-users but also help them to ensure that their technology is easily adopted at scale.

Our goal is to bring together the best technology solutions and assemble them in a way that promotes innovation, standardization, and interoperability. The startups that emerge from this process will be equipped with cutting-edge technology that is ready for widespread adoption.

We measure the impact of our efforts through increased efficiency and productivity, improved safety, and reduced costs. At Hensel Phelps, we have a long-standing commitment to delivering successful projects and making a positive impact in the communities we serve. For 85 years, we have been the largest airport builder and the top tech contractor, delivering world-class projects such as airports and hospitals, and making owners and workers happy.

3. How does Diverge collaborate with other stakeholders, such as startups, universities, and government agencies, to support innovation and technology?

At our company, we prioritize collaboration and innovation through our partnerships with research institutes, universities, and startups. Instead of just providing funding, we actively support these entities by providing hands-on guidance and access to real-world job sites to help them tackle industry challenges head-on.

Additionally, we foster innovation from within by hosting internal pitch competitions for our employees and anyone with an innovative idea to bring forward. This not only incentivizes creativity but also provides a platform for growth and commercial success for the best ideas. With a successful track record of 30 years of supporting and growing startups, we continue to drive innovation and drive positive change in the industry

4. As a CVC, you likely face similar challenges to others in the field. How do you ensure efficient and effective solutions?

The construction technology industry has seen a rise in collaborative efforts between leading CVCs in recent years. Regular meetings are held between top GCs to exchange ideas and solutions, leading to a shared pool of knowledge and expertise. This collaboration not only allows for the identification of new investment opportunities and the overcoming of industry challenges but also fosters relationships that may lead to joint ventures and strategic partnerships.

By working together, CVC firms can expand their investment opportunities, tap into new markets and technologies, adopt best practices, and drive innovation and growth in the industry. This results in improved products, services, and overall market performance, enabling CVC firms to achieve their goals more efficiently and effectively through collaboration.