Funding a Greener Future in Construction

By Samuel Okoronkwo

Construction companies need to take more risks – not something I would usually say. However, when it comes to building a greener future in construction, taking risks on sustainable tech startups is becoming a must.

There are hundreds of ambitious construction tech (ConTech) startups ready to create a greener construction industry. The problem is that they do not have the funding to achieve this.

About a decade ago, startups were where everyone was putting their money. However, various high-profile failures in the years since have significantly reduced this funding. As well as this, higher interest rates and development costs are creating barriers to a greener construction industry.

Due to this, it is understandable why the construction industry is reluctant to take the risk of investing in these startups. Let us look at a few of these challenges in more detail.

The Time Challenge

Most start-ups find success by selling products directly to customers or clients. ConsTech startups do not have this luxury. Unlike other ConTech startups, those in construction must rely on on-site managers to take their product to their next project.

This long-term type of investment is a major part of the reason ConTech startups are struggling. Construction projects can take months before anyone even sees a construction site, and in that time, site managers must ensure investments stay relevant.

As you can imagine, sustainable ConTech products do not take priority in these cases. Construction project managers need concrete evidence that these products are going to be a worthy investment – evidence that is difficult for a startup to provide.


The Money Challenge

When once investors were desperate to be part of “the next big thing,” there is now the desire for quick wins. Aside from the longevity of some ConTech startup investments, the amount of money sustainable products need specifically is causing issues.

Larger upfront costs and longer development times are making it much harder for ConTech startups to get the funding they need. However, this is not the only reason money has become a challenge for startups.

VC enthusiasm for startups has also dwindled due to high interest rates. Even though investing in startups has always been high risk, it came with the promise of high rewards. Now, there is a high risk on both ends.

The Future Challenge

What does all of this mean for the future of construction and the possibility of a greener world? Should construction companies be taking more risks in sustainable tech startups?

Despite the willingness to take risks now being lower, the funder hunger is growing. Investors want to invest in these startups but they need to see bigger payoffs in the long run. The construction industry has never been about doing things fast. It has always been about doing things right. So, there is a chance we will reach a greener future through construction, it just might take longer to get there.

Remember, in the event of a construction dispute, Mercantile Barristers will be happy to assist. Similarly, if there is anything from this article you would like to discuss, do not hesitate to message me directly.

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