Procore expands into the Middle East and North Africa

Procore is expanding into the Middle East and North Africa through a strategic partnership with its Abu Dhabi-based investor Mubadala.

Procore logoSome six weeks after the May 2021 initial public offering (IPO) of its shares on the New York Stock Exchange (post), US-based construction management Software-as-a-Service (SaaS) provider Procore has continued its international extension. It has today (6 July 2021 news release) announced its expansion into the Middle East and North Africa (MENA), with a focus on the United Arab Emirates (UAE) and Saudi Arabia.

Mubadala Investment Company, an Abu Dhabi-based sovereign investor and existing Procore shareholder, will partner with Procore to drive its expansion into MENA. The partners say their venture will advance the opportunity for Procore’s platform to connect information and teams, drive performance, and ensure the safety of workers in the region’s construction industry. Procore says it has over 10,000 customers running in excess of one million projects around the world.

Executive perspectives

Tooey Courtemanche, Procore founder and CEO, says:

Tooey Courtemanche, Procore CEO“Procore builds software for the people who build the world. We are excited for our next phase of growth across the Middle East and North Africa in partnership with Mubadala. Procore is already used in over 125 countries, and expanding globally will enable us to better partner with construction leaders around the world. Our mission is to connect everyone in construction on our global platform, so that our customers can build faster, safer and smarter.”

Ibrahim Ajami, head of ventures and growth at Mubadala, said:

“The construction sector in the Middle East is ripe for disruption as it remains largely undigitised. Procore’s platform is a game changer, and we are excited to support them on their mission to connect everyone in construction on a global platform, bringing significant efficiencies to the industry across the region.”

Procore has appointed Mohamed Swidan as Procore’s head of MENA to build regional operations with all customer touchpoints in the team. Swidan is a former regional executive at Uber, and was previously a regional head of cloud at SAP. He said:

“Construction businesses in MENA today are accelerating their digitisation and innovation. As the COVID-19 pandemic recedes, owners and contractors are under continued pressure to drive innovation while controlling costs and improving productivity. … With Mubadala we have a unique opportunity to expand our one platform approach to a growing construction market, working closely with their team to respond to market needs.”

The Extranet Evolution perspective

Procore’s global numbers look impressive, but just 12.2% of its 2020 revenues was generated from customers outside the United States. It launched in Australasia in 2017 (post), and subsequently (from 2018) established a strong UK and Ireland operation, but its presence in many of its stated 125 countries is otherwise thin.

Mubadala may feel the MENA region is “largely undigitised”, but, buoyed by the presence of numerous overseas consultants and contractors, it has long been targeted by AEC contech vendors. The Middle East was a lucrative market during the growth years of the early 2000s, but the Global Financial Crisis seriously impacted several vendors (UK-based BIW* never recovered from the hit, and, financially troubled, was eventually acquired in 2010 by Germany’s Conject, then itself later, 2016, bought by Aconex – who were among the first to build a MENA footprint).

In the MENA region, Procore faces significant competition from longer-established and now well-entrenched AEC SaaS businesses offering largely similar functionality, plus additional applications (including extensive support for BIM – still not a Procore strength). From the English-speaking world, Autodesk, Oracle (now embracing Aconex), Trimble and Bentley Systems all have strong multi-application user bases in the Gulf region, alongside long-established SaaS niche players like Asite.

Nonetheless, the support of Mubadala is a strong endorsement, and a reminder of the growing appetite for construction technology investment in recent years.

[* Disclosure: I worked for BIW Technologies, 2000-2009, and was in Dubai (post) as the first wave of local job losses due to the financial crisis began. I have undertaken past consultancy projects for Procore.]

Permanent link to this article: https://extranetevolution.com/2021/07/procore-expands-middle-east-north-africa/

RIB Software: leadership changes

RIB software logoStuttgart, Germany-based RIB Software − since July 2020 part of French multinational Schneider Electric (post) − has announced that René Wolf will become managing director and CEO of the company with effect from 1 February 2022, succeeding Tom Wolf, who will step down as MD on 31 March 2022.

René Wolf, 47,  has many years of experience in the development and sale of international software solutions and in the digital transformation of traditional industries. He has worked for the Siemens Group in North and Latin America as well as in Germany in various management positions and corporate divisions.

Tobias Hamacher, 40, has been appointed managing director and CFO with immediate effect. Hamacher has many years of finance experience in the Schneider Group, and succeeds Michael Sauer, who will also step down on 31 March 2022.

RIB regional revenues, 2020Tom Wolf and Michael Sauer intend to remain members of the administrative board of the company until the end of their term in 2025, with Wolf retaining his position as chairman of the board.

In the year to 31 December 2020, RIB grew its revenues 24% to €254.6 million (c. £217m or US$301m) from 2019’s €214.6m and its operating EBITDA grew 27.5% to €65.3m (c. £56m or US$77m), and it continued to expand internationally, with a quarter of revenues now derived from north America (read RIB Group grows revenues 24% in 2020 – April 2021).

Permanent link to this article: https://extranetevolution.com/2021/07/rib-software-leadership-changes/

viAct: AI-powered construction safety

Recently receiving US$2m in seed funding, Hong Kong-based startup viAct is aiming to use artificial intelligence (AI) to create a “zero risk” smart construction site.

Founded in 2016 and based in Hong Kong, viAct has developed an artificial intelligence (AI)-based cloud platform that provides construction sites with round-the-clock visual monitoring for quality, security, safety and productivity management purposes. The application combines computer vision, edge devices and a mobile app. Computer vision detects potential safety hazards, construction progress, and the location of machinery and materials. Real-time alerts are sent to a mobile app with a simple interface, designed for rapid assimilation of information by users in noisy and dynamic working environments.

viAct Danger Zones AlertIn March 2021, the startup announced (TechCrunch) that it had raised US$2 million in seed funding, in a round co-led by SOSV and Vectr Ventures, with participation from Alibaba Hong Kong Entrepreneurs Fund, Artesian Ventures and ParticleX. By this time, viAct had more than 30 construction industry clients in Asia and Europe. Current customers include BTP, Swire Properties and China State Construction.

It plans to use its latest new funding for research and development, product development and expanding into neighbouring southeast Asian countries. These include Indonesia and Vietnam, both seen as growth opportunities over the next 5-10 years, with their governments planning for smart cities and new infrastructure. Singapore is also a target as it has mature developer customers willing to adopt AI-based technologies, as is Japan and Australia. Longer-term, the company aims to expand into Europe, encouraged by early adoption of its technology by firms from Italy and Spain

The viAct story

Gary Ng - viAct CEOThe company was founded by Gary Ng, CEOright, and Hugo Cheuk, now chief operating officer. Both graduated in building engineering from Hong Kong Polytechnic University in 2002 (see also this January 2021 StartUp.Info interview). Ng then joined an engineering consultancy firm before making a switch to technology businesses (he had senior roles at two Israeli-backed companies: Stratasys and EFI Optitex). Cheuk worked in range of media and manufacturing firms, including a major Asian cosmetics business.

In 2016, the two friends decided to start their own business, combining their engineering and technology experiences, and after identifying construction enterprises as ripe for technology adoption, began testing AI monitoring solutions for construction in 2019. Company-bespoke AI models were too expensive and time-consuming to develop, so they focused on building a standardised AI cloud platform that construction companies can deploy in minutes. Ng told Extranet Evolution that the viAct application analyses video outputs from existing site cameras (usually static devices, but also from drones, tablets and smartphones), using image recognition algorithms built upon a growing database of tens of millions of construction site images – captured during over 30,000 hours of construction activity.

COVID-19 impacts

Interestingly, expansion of the viAct team was not hampered by the COVID-19 pandemic. With employees forced to work from home locations, viAct adopted a what Ng called a “remote first” culture. This also enabled it to recruit the best staff regardless of location (it now has some 40 staff, including people working from India, Thailand, the Philippines, even Argentina). And they also apply a more international perspective to viAct’s work.

In January 2020, during the early days of the COVID-19 pandemic in Asia, viAct was the first Asian company to develop a face-mask detection solution for construction sites. Speaking about the latest funding round, SOSV partner and Chinaccelerator managing director Oscar Ramos said:

“COVID has accelerated digital transformation and traditional industries like construction are going through an even faster process of transformation that is critical for survival. The viAct team has not only created a product that drives value for the industry but has also been able to earn the trust of their customers and accelerate adoption.”

How viAct works

viAct Product shotDepending on use cases, viAct can capture video and image data for real-time processing or post processing.  Captured data is streamed directly to AI engines for data analysis and to generate alerts – typically sent within a minute. Warnings help workers to protect themselves. viAct also helps safety managers or site agents monitor onsite incidents, while allowing senior management oversight of multiple project sites.

Anyone without AI knowledge and coding background can set up the viAct system within five minutes. Its simple to use, highly flexible, plug & play technology makes it easy to onboard new users, says Ng.

To date, viAct has developed over 50 AI modules relating to a wide range of construction environments, plant and equipment, materials and processes. Some are generic (safety modules relating to wearing of personal protective equipment, PPE, for example), while others are specific to particular environments (viAct has modules developed for deployment in tunnels during infrastructure projects, for instance). viAct aims to eventually have a library of AI modules for most processes and working environments. Ng says customers can see how many workers have been deployed, what equipment is operating, the location of materials and tools, etc – many activities which used to rely on human monitoring can now be automated.

Deployment

viAct sells just its cloud platform, to which customers connect their existing cameras and online systems. As a cloud service, viAct customers pay according to the volume of images monitored by the system’s modules. Cheuk, below right, says:

Hugo Cheuk (COO, viAct)“Some projects start with feeds from just two or three cameras and use just two or three modules. A basic deployment at that level for six months will cost under US$5,000 – less than £1,000/month. More cameras and more modules will naturally increase customers’ use of our AI service and increase the cost pro rata, but the cost benefits in improved safety, quality and productivity usually mean a rapid return on investment.”

Cheuk adds that, once deployed, the system can be constantly updated.

“Our software has a drag-and-drop interface that allows users to quickly select the modules they want to use, and they can swap between modules at any time – vital as dynamic projects progress, deploy different equipment and manage different processes.”

The company featured in CEMEX Ventures’ TOP 50 most promising startups of 2020. It is also an Autodesk development partner, and has created an integration between its AI platform and Autodesk BIM 360.

The competitive space

viAct has few local competitors in southeast Asia. Its major international competitor is a Boston, US-based firm, SmartVid.io, founded by Josh Kanner (who co-founded Vela Systems – acquired by Autodesk in 2012, TechCrunch, to form the basis of Autodesk’s BIM 360 field mobile application), and also employing former ConstructWare and CTSpace executive Gary Greenberger (April 2008 post).

Also exploiting construction site video content using AI is Dublin, Ireland-based Evercam (April 2020 post: Evercam : site imagery, AI and BIM), which deploys AI image recognition tools to help construction site managers monitor vehicle movements, and, in a COVID-19 context, people movements.

However, viAct is located in one of the fastest growing global construction markets, and has deep local and domain-specific experience – and, perhaps more important – it also has huge volumes of data. Moreover, its business model is geographically very agile, not reliant on existing technologies, and its AI modules seem highly customisable to different corporate and country-specific compliance regimes. Domain-specific expertise and experience can be critical in attracting investors, and will be important in markets, such as SE Asia, with big growth potential (in April 2021, Bentley Systems justified an acquisition for its Asian region-specific challenges and project dynamics).

Update (12 January 2022) – Viact has published a white paper covering areas including: what are the major pain points on construction sites, the impacts of COVID-19, what stimulates technology adoption, and growth trends in the contech market. Register here to get the paper.

Permanent link to this article: https://extranetevolution.com/2021/06/viact-ai-powered-construction-safety/

Causeway secures £120m to expand

UK construction technology vendor Causeway plans strategic acquisitions and accelerated organic growth following £120 million Rothschild private equity injection.

Causeway, the Buckinghamshire, UK-based construction technology group, has secured a £120 million (c US$166m or €139m)  investment from Five Arrows Principal Investments (the European corporate private equity arm of Rothschild & Co). The company says the investment will fund strategic acquisitions and accelerate its organic growth strategy to digitally connect the construction supply chain through further development of its cloud platform.

Causeway logoThis investment follows a period of strong and consistent growth at Causeway, resulting in an earnings compound annual growth rate of 31% since 2015, driven by increased industry adoption of digital solutions and acquisitions that have broadened its product portfolio.

Established in 1999, Causeway Technologies has over 2,500 customers and more than 350 employees. It provides enterprise and cloud software solutions to the construction and infrastructure maintenance industries and spans the full value and supply chain. Its product portfolio spans a wide range of activities from specialist design, tendering and procurement (it has a transactions management platform, Tradex), through construction cost and site management to applications supporting operation and maintenance activities.

During the early 2000s, it offered a SaaS construction collaboration platform powered by OpenText, but this became a relatively minor part of its offering amid a series of industry transactions (Elstree Computing in 2007, Connect in 2008), and so received less Extranet Evolution attention – though Causeway LiveLink did get a passing mention in NBS’s 2019 Construction Technology Report (post). In 2017, Causeway agreed a £40.5m refinancing package with Guggenheim Investments (TCI report). In the year to 31 December 2019, Causeway Technologies Ltd reported an annual turnover of £32.6 million (c US$45m or €38m) and an annual profit of £1.8m.

Investing in AEC digitalisation opportunity

Causeway says the investment reinforces the opportunity in the construction sector and the need for solutions that address both the pace of digitalisation and productivity issues caused by complex supply chains, and the transient nature of construction projects. It says its solutions connect the construction ecosystem, providing solutions that transcend functional and organisational boundaries.

CEO perspective

Phil Brown, chief executive and executive chairman of Causeway, said:

Phil Brown, CEO of Causeway“This investment marks another leap forward for our business and for the value we can add to our customers. Our core purpose and passion is to digitally enable the global construction industry – the support of Five Arrows allows us to accelerate our work to help solve our customers’ challenges.

“Our ambition is to ensure that data flows seamlessly across the construction process, making our customers more efficient and their data more useful and actionable. That is the only way to drive better project outcomes, especially around value and quality.

“While cloud-based tools and mobile connectivity have helped put solutions into people’s hands, much is still very fragmented in this industry. We are building a persona-based platform with relevant applications and data delivered to each member of the construction supply chain via their desktop or mobile devices. The platform will be open, making it easy to integrate with both third-party applications and any bespoke, customised applications that customers might have had developed. This approach will help break down silos and give businesses large and small, in all parts of the construction ecosystem, complete visibility and control over their projects and supply chains.”

Five Arrows

Five Arrows Principal Investments have made this investment in return for a significant minority stake in Causeway. Following completion of the transaction, Vivek Kumar (partner) and Sacha Oshry (managing director) of Five Arrows Principal Investments will join the board of Causeway.

Five Arrows focuses on investing in middle-market companies with highly defensible market positions; strong management teams; business models with high visibility of organic unit volume growth and strong free cash flow conversion; and multiple operational levers that can be used to unlock latent value. Sectors are limited to data and software, technology-enabled business services and healthcare.

The EE perspective

Update (noon BST: 29 June 2021) – Over the past 20 years, Causeway has grown primarily through merger and acquisition activity relating to numerous, often niche technology vendors in the architecture, engineering and construction sector. As a result it has a portfolio covering a wide and somewhat disparate range of activities, though few are covered in depth.

In an Extranet Evolution interview in 2017, then Aconex CEO Leigh Jasper talked about “not … being a mile wide but an inch deep”, talking about building deep functionality that complements core strengths. The Causeway approach appears to be different: covering as wide a range of construction activities as possible, with a view to creating a platform that connects them all. One of Causeway’s most recent acquisitions – the May 2021 purchase of telemarketing specialist Enhance Consultancy (Causeway news) – was justified on the grounds it would improve intelligence and processes between tendering phase and project delivery, integrating pre-construction and procurement. T

Causeway’s Tradex B2B transaction exchange was used by some 60,000 companies to exchange approaching £10bn in invoice value in 2020. In the UK, Tradex faces competition from, among others, the COINS Construction Cloud (now boasting over 100,000 users), and the recently launched COINS Construction Marketplace (15 June 2021), which augments its deep construction ERP expertise and its e-Xact Online technologies (acquired in 2011).* Also in this space is the Asite Marketplace supply chain management platform; Asite recently appointed former Laing executive Jas Mann to lead the development and growth of the Asite SCM solution (Asite news release). Extranet Evolution has also looked at the UK’s OpenECX, developed by former COINS executive Matthew Jones (OpenECX targeting subcontractors).

The Five Arrows investment clearly gives Causeway a warchest to make further acquisitions, and to invest in its existing applications. It has invested in an R&D centre in Middlesbrough that is focused on building new platform services and refactoring existing products so that they are all capable of serving customers from the Google Cloud platform – it clearly sees the cloud as the future. Will Causeway continue its previous approach of relatively modest acquisitions, or will it perhaps look to strike a major deal to cement a strong foothold in one of its sectors? Will it continue to focus on the UK (96% of its revenues are attributed to the UK), or will it look to diversify geographically?

COINS update

* Update (1 July 2021) – David Bullock of COINS writes:

COINS logo“The COINS Construction Marketplace augments its … construction ERP with an innovative eProcurement platform, providing … end-to-end procurement process for construction and home building businesses.

“Yes, we are building into the Marketplace the capability for manufacturers’ product data to be available, to supplement the information held within the Marketplace (bringing across the e-Xact product data), but first and foremost its purpose is to provide a simple, efficient, touch-less procurement process for construction and home building businesses.”

Permanent link to this article: https://extranetevolution.com/2021/06/causeway-secures-120m-expand/

Bentley Systems’ busy buying spree

Since buying Seequent in March, Bentley Systems has added several more software businesses to its portfolio, including an India-based mobile project controls business, Nadhi, and two IoT specialists.

Bentley logo 2017Bentley Systems has continued to expand its portfolio in recent months. Since investing around $900m in New Zealand-based geoscience modelling software provider, Seequent (post) in March 2021, it has acquired five smaller businesses. The deals concern:

  • a Canada-based specialist in transportation planning
  • an India-based mobile project controls business
  • two Internet of Things (IoT) tech specialists – one from the US, the other from Iceland – and
  • a US specialist in utility pole management

Bentley buys INRO Software

On 14 April 2021, Bentley announced its acquisition [no terms disclosed] of INRO Software, a specialist in multimodal transportation planning, traffic simulation, and mobility visualisation software, based in Montreal, Canada.

INRO's Emme softwareINRO has over 40 years experience in mobility simulation and modeling for metropolitan, regional, and national transport and transit operators and planning agencies. Its customers include Transport for London, Transport for New South Wales, the Washington State Department of Transportation, Sweden’s Transport Administration Trafikverket, and the public transport system of São Paulo SPTrans.

INRO’s products include Emme, a multimodal transportation planning system for urban, regional, and national transportation forecasting; Dynameq, a vehicle-based traffic simulation platform for city-wide traffic planning; and CityPhi, a mobility visualization solution providing data visualization and visual analytics of large-scale mobility and geospatial datasets.

Bentley buys India-based Nadhi

On 28 April 2021, the group’s internal investment incubator Bentley Acceleration Initiatives announced the acquisition [no terms disclosed] of Chennai, India-based Nadhi Information Technologies, a 30-strong specialist in cloud-based project controls, analytics, and decision support for construction supply chains. Bentley said “Nadhi brings … a critical mass of field-experienced professionals in construction automation, attuned to their region’s specific challenges and project dynamics,”

Nadhi nPulseWhile China and the US will remain the two highest-value construction markets globally, India is set to become the third highest-value market by 2029. However, Asian project teams are often held back by conventional construction methodologies, poorly coordinated schedules and lack of visibility into project status. Project managers want to interconnect their data silos—spanning documents, schedules, budgets, issues and risks, resources, and materials—all in one environment. Some are using Nadhi’s services to solve these challenges and improve their project delivery using digital workflows. Since offering lean construction consulting services in 2008, Nadhi has pioneered cloud-based and mobile-enabled project controls.

Its offering is explicitly configured for the needs of project teams in Asia. Integrated project controls in Nadhi’s nPulse software combines data-driven decision support and predictive analytics to give engineering and construction projects early warning of schedule risks and potential delays in milestone completion, advancing project planning and execution from reactive to proactive. Referring to Bentley’s acquisition of SYNCHRO in June 2018 (post), Bentley Systems’ Ashit Gandhi says:

Combining Nadhi’s proven project controls and analytics capabilities with Bentley’s SYNCHRO 4D construction modeling and field-based construction delivery will enable more integrated and efficient digital workflows, tailored specifically to Asian needs.

Bentley builds IoT ‘digital twin’ capability

Also in April 2021, Bentley Systems announced its acquisitions of California’s sensemetrics and Iceland’s Vista Data Vision, both providers of software for Internet of Things (IoT) applications in infrastructure. The deals, together adding 40 employees, will expand the scope of the Bentley iTwin platform to support infrastructure digital twins by incorporating real-time sensor data. Bentley says they are both “particularly complementary” to its recently completed Seequent acquisition.

Sensemetricssensemetrics

Founded in 2014 in San Diego, California, sensemetrics provides a platform used extensively for real-time safety and risk monitoring in infrastructure, mining, and construction activities. It enables measurement and visualisation of civil structural movement, for condition assessment, and to help detect and prevent damage.

Its modular design provides a flexible platform for developers to build their own applications to meet specific infrastructure IoT needs. The Sensor Integration Builder uniquely enables asset owners, engineers, and risk managers to choose their own sensors – with assurance that they can be seamlessly integrated into digital twin solutions in minutes. And sensemetrics’ Thread and Strand connectivity devices can optionally accelerate “plug and play” deployments for wireless sensor devices, even for “off-grid” infrastructure locations.

Vista Data VisionVista Data Vision

Based in Reykjavik, Iceland, Vista Data Vision, spun out of Vista Engineering, provides remote, real-time monitoring of power, traffic, and sanitation systems. Its solutions have been used in more than 2,000 projects in more than 70 countries, collecting millions of data points daily from hundreds of thousands of sensors.

… and Bentley adds utility capability with SPIDA

Finally (for now), on 14 June 2021, Bentley announced its acquisition [again, no terms disclosed] of Ohio, US-based SPIDA Software, developers of software for the design, analysis, and management of utility pole systems for electricity and communication services providers in the US and Canada. Its customers include Ameren, EPCOR, Nashville Electric Service, and Southern California Edison.

Permanent link to this article: https://extranetevolution.com/2021/06/bentley-systems-busy-buying-spree/

Reflecting on the Procore IPO

US AEC SaaS player Procore raised over $600m in its May 2021 IPO, but its global ambitions face significant competition.

Procore logoIn February 2020, US-based construction Software-as-a-Service (SaaS) provider Procore filed its intention to make an initial public offering of its shares on the New York Stock Exchange. But the onset of the global COVID-19 pandemic forced a postponement (read March 2020 EE post: Procore IPO in for prolonged coronavirus lockdown?).

On 20 May 2021, however, Procore pressed ahead with an IPO of 9.47 million shares (leaving a further 128 million shares outstanding). It initially had a target price range of $60-65. Achieving a midpoint IPO was forecast to generate net proceeds of around $553 million. If IPO underwriters (Goldman Sachs, JP Morgan, Barclays and Jefferies) exercised their right to purchase additional shares, Procore was potentially going to raise $608.5 million. The midpoint deal would have valued the company at $8.9 billion.

Doubled valuation

However, it sold the shares for $67 each, raising $634.5 million (Yahoo!Finance). On the first day of trading, Procore shares opened at $84 per share, and closed at $88, indicating a market capitalisation of $11.3 billion (Forbes; on 10 June 2021, they were trading at $87). This was a significant step up, effectively doubling previous valuations.

An April 2020 funding round raised $150 million, giving a valuation of $5 billion, up from a September 2019 raise ($94.9 million) where Procore was valued at $4.77 billion. Before the IPO, the company had raised over $450 million in venture capital funding. Investors included D1 Capital Partners, Tiger Global Management, Dragoneer Investment Group, ICONIQ Capital, Bessemer Venture Partners, Lead Edge Capital, Lumia Capital and Scop Venture Capital. Pre-IPO, entities associated with ICONIQ held around 44% of the company’s shares, while entities associated with Bessemer Venture partners held  almost 15%. Post-IPO, they hold approximately 37% and 13% respectively.

Procore: deepening losses

According to its updated IPO prospectus (S1 filing), Procore has seen its revenues growing but it has also seen deepening losses. Prior to the pandemic, the company generated revenue of $112.3 million in 2017, $186.4 million in 2018 (up 66% year-on-year), and $289.2 million in 2019 (up 55%). In pandemic-affected 2020 it generated revenues of $400.3m (up 38%). Up to the end of 2020, it had accumulated 1.6 million users through 10,166 customers – of which 843 each contributed annual recurring revenues of over €100,000.

However, it had mounting net losses: $55.5 million in 2017, $56.7 million in 2018, $83.1 million in 2019, and $96.2 million in 2020. The company was blunt about its history of losses and the uncertainty about future profitability:

“As of December 31, 2020, we had an accumulated deficit of $397.0 million. We are not certain whether or when we will be able to achieve or sustain profitability in the future.”

In the first quarter of 2021, Procore had a net loss of $14 million on revenue of $114 million, compared to a $19 million loss on revenue of $92 million for the same (pre-pandemic) period a year ago.

Capitalising upon construction’s continued digital transformation

Procore platform pitch

Procore aims to become the dominant construction management platform in the world, with a suite of products supporting workflows from pre-construction – it launched Procore Preconstruction yesterday (10 June 2021) – to project completion (outside its July 2019 acquisition, post, of Honest Buildings, it largely ignores the opportunity to host asset owner-operators’ whole life data). However, as its prospectus made clear, there are substantial risks in delivering technology to a notoriously fragmented, volatile, low-margin, short-termist, traditional and historically low-tech industry.

Construction businesses have tended to under-invest in information technology. Procore sees a big opportunity to capitalise as construction’s digital transformation continues. It quotes a Deloitte 2017 estimate that construction currently invests in IT at half the rate of other industries – 1.5% of revenues versus a 3% pan-industry rate. A 2020 McKinsey report suggests industry spending on software and infrastructure could double, and investors have been pouring money into construction tech businesses over the past decade (AEC TechTV Episode 16: Investment in construction software is booming).

Procore says the total addressable market is large and significantly under-penetrated. It estimates the global construction industry spends approximately $9.2 billion per annum on software.

The COVID-19 dividend

While the global pandemic delayed Procore’s IPO, it may also have helped accelerate technology adoption, including use of platforms such as Procore (Procore: Lockdown accelerates demand for digital transformation).

The architecture, engineering and construction (AEC) sector has historically been reliant upon exchanging drawings and documents, and managing numerous, often fragmented and disconnected workflows. Despite significant adoption of Software-as-a-Service information management platforms since the late 1990s onwards, many projects – particularly at the smaller end of the scale – continue to be managed using email and generic file-sharing solutions. The pandemic prompted many businesses to rethink their approaches, increasing use of various construction-oriented solutions (desktop, web, mobile), alongside expanding use of video-conferencing applications, some of which were quickly integrated with AEC platforms (read: Coronavirus, construction and software, and Coronavirus construction impacts (and software offers) continue).

International ambitions and competition

Procore is running projects in over 125 countries. This sounds impressive, but just 12.2% of its 2020 revenues was generated from customers outside the United States. It faces significant competition from longer-established and now well-entrenched SaaS businesses offering largely similar functionality, plus additional applications. Mature and more widely distributed players include Autodesk, Aconex (now part of Oracle), Trimble and Bentley Systems.

The latter’s September 2020 IPO suggested a market valuation of $5.5 billion (post). It is perhaps bizarre that Procore has already achieved double this valuation despite only having a construction management platform, while Bentley’s portfolio includes the widely deployed, enterprise-grade ProjectWise SaaS platform and UK-based Business Collaborator (post), plus design authoring and other solutions. Similarly, Trimble then also had a market capitalisation of around $11 billion, despite a portfolio including multiple SaaS products – e-Builder (post), the former 4Projects (post), Meridian, GTeam (post) later relaunched as Trimble Connect, and a mobile-oriented platform, Trimble ProjectSight.

Oracle acquired Australia-based Aconex for $1.2 billion (around ten times revenue) in late 2017 (post). The SaaS platform joined a construction portfolio that included the widely-deployed Primavera programme management application. The deal made Oracle the first major B2B software giant to make a concerted play in the construction SaaS vertical market (“they know data, they know SaaS”).

Outperform Autodesk?

Autodesk BuildAutodesk has a market capitalisation of around $60 billion. In the 2000s, it learned some painful lessons about trying to export US-oriented AEC SaaS platforms – remember Buzzsaw and Constructware (post)? –  to new geographies. And, like Bentley and Trimble, Autodesk’s biggest AEC revenue-generators are not its SaaS collaboration tools (for example, BIM 360, now part of the Autodesk Construction Cloud; post). Its cash cows are its design authoring tools (AutoCAD, Revit), among others (though there are tensions with some of its architect customers – post). And, while we are talking about BIM, Procore also lags other vendors in its detailed support for BIM process capabilities.

There are also some strong regional SaaS players in Europe (thinkproject, Hexagon/Bricsys, RIB, Asite). And the Germany-based Nemetschek group also has a well-embedded base of AEC design, BIM and related authoring tools.

Caveat emptor

In short, Procore investors need to look realistically at the global competitive landscape. If Procore is serious about becoming the major global player, it will have to shift from its reliance on the US market. International expansion will need to accelerate. This won’t be easy. Across many countries, their AEC sectors remain highly fragmented, volatile, low-margin, short-termist, low-tech, parochial and often change-resistant. And if these sectors embrace digital working enthusiastically, other players already have local resources in place to service their needs. US stock market sentiment towards Procore is clearly positive. However, it faces some critical competitive challenges over the next three to five years to retain and reward the confidence of its VC-based backers.

Permanent link to this article: https://extranetevolution.com/2021/06/reflecting-procore-2021-ipo/

Script & Go relaunches in the UK with housebuilder focus

Rennes, France-based Script & Go is looking to establish itself in the UK with a new focus on the house-building sector, capitalising upon its strong experience in this sector in France.

Script&Go logo 2018Based in Rennes in north-west France, Script & Go, previously best known in the UK for its Site Diary application (Script&Go’s Site Diary revamped – May 2019), has developed a new product for the UK construction market. It is looking to capitalise upon its customer experience with French housebuilders. Its latest offer is a Software-as-a-Service defects management platform to manage the reporting and rectification of issues during the initial handover to new residents in the post-construction warranty period.

Site Diary product owner Khaldon Evans told Extranet Evolution that Script & Go had been developing new products to support its largely France-based customers. They include contracting giants Vinci and Bouygues, automotive manufacturer Renault, aerospace manufacturer Dassault, rail operator SNCF and infrastructure provider Suez. Its solutions support a wide range of assets, from conventional buildings and infrastructure to aircraft and railway assets.

Since its UK launch in 2017, UK customers for Site Diary have included contractors Costain, Alun Griffiths and ISG, but Evans said Site Diary had struggled to expand more widely. Similar to Checkd’s ‘excuses’ experience in Scandinavia (post), he said “Expansion has been slow for two reasons: either the managers don’t want to pay for the app, or managers want to pay but field workers don’t want to use it. We have never lost any deals yet due to any competitors – at least, prospects didn’t tell us that.”

The company has recently taken strategic decisions to drop the UK Site Diary corporate branding, instead use its Script & Go name, and focus on its core French strengths.

Script & Go housing focus

Script&Go checklistOne profitable market has been products for French home-builders. Evans said that in some parts of northern France its platform is being used by 80% of home-builders. The French business initially grew through collaboration with a local house-builder. Adoption of its technologies then gradually extended to other house-builders in the region. As in the UK, few French house-builders operate nationally, instead specialising in particular house types that suit their local regions. Script & Go developed a platform to manage the final stages of construction, where house-builders need to capture and remedy defects with their subcontractors

Home warranty management

The 60-strong company recently (May 2021) launched a new Site Warranty product for the UK (see also this blog post), and is looking to get some early traction in the UK and then build out its market. Using its application on a mobile device, users capture defects. They can combine text entry, photographs, associated markups, documents and drawings, plus links – where necessary – to any related defects, and location information on building floorplans. These are then notified to the relevant subcontractor for rectification while providing residents with process visibility. The platform also provides reporting functions to house-builders helping them manage progress and identify persistent quality issues across their supplier base.

Script&Go Site warranty product

Script & Go is also migrating its technologies to an integrated platform to help support more deployment options – key to the roll-out of its warranty product. Currently, Evans said, its ‘back-office’ platform (offering unlimited storage and use across an enterprise) is available for a one-off perpetual licence fee of £490. Individual field users are then enabled for a one-off fee of £300. In September 2021, the company will launch a subscription-based system priced at £20 per month per user. The Site Warranty application is to be offered at a standard £30 per residence to cover the period of a typical two-year warranty period.

Permanent link to this article: https://extranetevolution.com/2021/06/scriptgo-relaunch-uk-housebuilder/

Checking in with Checkd

Now a subsidiary of a VC-backed Swedish ERP business, Checkd enjoyed its best ever year in 2020, and is looking to continue its 50% year-on-year growth.

Checkd logoSince first featuring in Extranet Evolution in January 2015 (Checkd mobile checked out), the Norwegian mobile-first and Software-as-a-Service (SaaS) construction application provider Checkd has, despite BIM advances, continued to capitalise on the use of visual and PDF-based information for site-based project reporting and collaboration.

Checkd now VC-backed

Tom-Erik von Krogh Martinsen, founder and CEO at Checkd.By 2018, the Oslo-based company was looking to expand beyond its then 90-strong corporate customer base in Norway and was considering marketing in the UK and Germany. However, founder Tom-Erik von Krogh-Martinsen, right, told EE that expansion into Sweden – a construction market twice the size of Norway’s – proved a vital stepping stone. By early 2021, it had more than doubled its customer-base, having, in December 2020, been acquired by Next One Technologies, a Swedish provider of cloud-based ERP solutions for small- to medium-sized construction businesses (news release).

Gunilla Åberg, CEO at Next One, said:

“We’re pleased to merge with Checkd, They have grown quickly in Norway and we see great possibilities to grow together both within the Nordics and in Europe. Our joint solution should be the natural choice for European construction and maintenance companies that want a professional, modern, industry-specific business and project system.”

Martinsen had launched Checkd in 2013, after developing a ‘proof of concept’ mobile reporting tool for a Norwegian construction trade body, and, without seeking additional investment or venture capital backing, the now 15-strong company’s initial growth was a bit slow. With parent Next One Technologies supported by Nordic software investor Monterro, “now we are not building stone by stone – we have more money to scale faster,” Martinsen told EE.

COVID-19 removes excuses

Checkd floorplanAs in many other countries’ construction markets, Martinsen said Scandinavia is dominated by SME contractors and subcontractors. They are also, in his view, often resistant to change, with a culture of making excuses to avoid adopting new technologies. However, the COVID-19 pandemic had helped “remove their excuses”. It has convinced construction businesses about the need to digitise, he  said. Companies were holding more digital meetings, and could not do field or site inspections in groups. Instead, they were using Checkd to capture problems and issue notifications, which could then be discussed online (the Checkd task-handling workflow is identify, notify, fix, check, close).

And it’s not just about marking things up on a PDF. Martinsen says: “Importantly, our users can use any drawing or picture to pin the tasks/observations: Google Map for roofers, facade pictures for EWS1 [external wall survey] inspections, even a sketch.” (And, in light of ongoing post-Grenfell cladding concerns, he is keen to talk to potential UK partners interested in capturing EWS inspection outputs.)

In 2020, Checkd achieved annual recurring revenues of around €1 million, after 50% year-on-year growth, Martinsen said. The customer base now includes some prominent names (SWECO, for example), and its application is also being used in the UK by FK Group, a building envelope specialist in northwest England.

Despite continued BIM advances, he says 95% of Scandinavian construction projects still use 2D documentation for inspection purposes. However, anticipating increased demand for BIM integration, Checkd has also been working with another Norwegian business, Oslo’s Catenda (June 2017 post), to create a module using its BIMSync API (application programming interface), though it has only been used on a few pilot projects so far.

Permanent link to this article: https://extranetevolution.com/2021/06/checking-checkd/

FARO acquires Holobuilder

California-based Holobuilder, a pioneer in AEC 360-degree photogrammetry, has been acquired by FARO Technologies in a US$34 million deal.

HoloBuilder LogoFARO Technologies has invested $US34 million to acquire HoloBuilder, the San Francisco, US-based 360-degree reality capture technology developer. The Florida, US-based corporation known for its 3D measurement, imaging, and realisation solutions for architecture, engineering and construction, says: “HoloBuilder brings to FARO its leading photogrammetry-based 3D platform, which delivers hardware agnostic image capture, registration and viewing to the fast-growing Digital Twin market.” (7 June 2021 news)

Holobuilder: the back story

Holobuilder provides contractors with a solution to efficiently capture and virtually manage construction progress using off-the-shelf 360° cameras. It has strong connections with Germany; soon after its 2014 launch, it raised US$665,000 in seed funding from High-Tech Gruenderfonds. It then raised a further US$2.25m in an investment round in early 2017, backed by VC Brick & Mortar Ventures and Tandem Capital.

First featured in Extranet Evolution in March 2017, Holobuilder soon had some 3,000 construction projects on its platform and its customers included 40% of the top 100 general contractors in the US (Holobuilder launches 360 Construction Documentation Solution). In 2018, it began to expand in Europe (post) and added an Artificial Intelligence solution, “SiteAI”, to automate progress control (HoloBuilder launches SiteAI progress control). This application calculated progress reports from capturing weekly 360° progress photos, helping contractors to detect discrepancies and accelerating progress payment processes.

HoloBuilder JobWalk PlannerIn April 2019, Holobuilder added a “JobWalk Planner” feature enabling off-site stakeholders to pre-plan construction documentation sequences for their teams. By facilitating team management and planning of job walks, it meant more perfectly executed site documentation with less room for error or forgotten site images.

After establishing an EU hosting base, Holobuilder received investments from German energy business E.ON, a Berlin-based construction technology investor, Foundamental (an investor in early 2019 too), and NRW.BANK, the promotional bank of Germany’s North Rhine-Westphalia (August 2019 post). The company’s R&D facility was located in the high-tech cluster of Aachen in Germany, and was where HoloBuilder’s SiteAI solution was developed.

Digital Twin hype

At the time of that investment, EE questioned the company’s use of the term ‘Digital Twin’. The Gemini Principles developed by the UK’s Centre for Digital Built Britain talk about: “A realistic digital representation of something physical. What distinguishes a digital twin from any other digital model is its connection to the physical twin”. (Update – 8 June 2021 – The UK BIM Alliance* has just published a positioning statement on Digital Twins; this reiterates that static BIM deliverables are augmented by “the addition of dynamic ‘right-time’ data“). However, Holobuilder and its new owners continue to stress their own view of the Digital Twin opportunity.

FARO says the deal means that HoloBuilder’s Software-as-a-Service (SaaS) platform will add fast and easy reality-capture photo documentation and added remote access capability to its 3D point cloud-based laser scanning. FARO it says it will create “the industry’s first end-to-end Digital Twin solution“—all without leaving the FARO ecosystem. The combined solution will provide comprehensive scanning and image management capabilities for the Digital Twin market including robotic assembly 3D simulation, construction management, facilities operations and management, and incident pre-planning.

Holobuilder deal views

Michael Burger, FARO president and CEO, says:

FARO logo“The high-value that digitalization brings to the AEC and Operations & Maintenance industries creates significant market opportunity for FARO. The addition of HoloBuilder to our offering accelerates the reality of a true end-to-end Digital Twin solution and advances our strategic objective of increased recurring revenue through market share gains in this large and growing segment.”

HoloBuilder president and founder Mostafa Akbari-Hochberg says:

“HoloBuilder and FARO together furthers our vision of digitizing the physical world to enable process automation and workflow optimization. The powerful combination of high accuracy laser scanning with real-time 360° photo capture and collaboration will empower both companies’ customer bases with a comprehensive Digital Twin solution.”

As of 30 April 2021, HoloBuilder had US$4.0 million in annual recurring revenue with a compounded annual growth rate of nearly 75% since 2019. It is one of several ambitious players in the photogrammetry field – in July 2020, Israeli startup Buildots raised £12m to fund its own expansion (post).

[* Disclosure: I am a member of the executive team of the UK BIM Alliance.]

Permanent link to this article: https://extranetevolution.com/2021/06/faro-acquires-holobuilder/

Corecon upgrades project team portal

US-based Corecon Technologies has continued upgrading its cloud-based construction estimating, project management and job cost software suite.

Corecon logoCalifornia, US-based construction software-as-a-service (SaaS) provider Corecon Technologies has completely rebuilt its TeamLink Portal for use with its cloud-based construction estimating, project management and job cost software suite. For Corecon subscribers, the portal connects internal and external project team members by providing secure, real-time access to project information. Corecon says this 2021 release is part of Corecon’s phased platform change to Angular.

President Norman Wendl says:

“With this latest update, we are rounding the corner on completing major upgrades to Corecon that give subscribers even more functionality to win bids, manage projects and collaborate more closely with the project team. A distinctive offering for Corecon subscribers, our TeamLink Portal now makes it easier than ever before to streamline project management, harness important information and create lasting relationships that lead to future work for all project stakeholders.”

The updated portal improves the user interface (UI), and simplifies navigation for external team members not familiar with the software. Corecon says it other enhancements help deliver reliable information more efficiently across the project team, including:

  • a new Allowance feature for client selections
  • ability to view Daily Logs when permission is granted by the portal administrator
  • ability for subcontractors to create pending subcontractor invoices

Corecon graphicTeamLink Portal supports all browsers. Once an internal or external team member logs in to the solution, navigation and access to all phases of the project is quick, easy and secure. Team members can access, respond to and store project information. And the portal delivers value after project completion. All documentation through the life of the project is stored on the portal, so the building owner can download final project documentation such as product manuals and as-built drawings.

Corecon’s cloud-based construction software provides business development, estimating, document control, contract administration, job cost control, scheduling and collaboration functionality, as well as integrations with popular generic business accounting systems including Intuit QuickBooks, Sage 50, SAP Business One or Xero.

Permanent link to this article: https://extranetevolution.com/2021/06/corecon-upgrades-project-team-portal/

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