附近上门

When industry expertise and passion come together, magic is bound to happen. That鈥檚 the place in which finds itself as the firm closes on a $97.2 million fund to invest in construction tech startups.

Subscribe to the 附近上门 Daily

Founder and Managing Partner is leading the charge.

鈥淚t鈥檚 safe to say I was born and raised in the industry,鈥� he told 附近上门 News. 鈥淚 started young, got dirt under my nails, and came to appreciate the challenges the industry faces.鈥�

Bechtel鈥檚 family owns and has run construction and engineering behemoth The Bechtel Group for 120 years. The San Francisco company last year.

Bechtel is taking his personal experience to the next level as his firm Brick & Mortar closes on its first institutional capital. Construction tech startups, as defined by the company, are 鈥渆merging companies developing software and hardware for the industries of architecture, engineering, construction and facilities management.鈥�

Bechtel is also no stranger to investing. He began backing startups as an angel in 2012 and personally funded Brick & Mortar鈥檚 early investments in the construction tech space.

And he鈥檚 already seen a number of impressive exits. For example, Bechtel was the largest investor in software startup s in 2012. That company was acquired by in November 2018 for $875 million. Bechtel also invested early in , which was also acquired by .

These two exits, however, point to a larger trend: construction tech, once a not-so-sexy industry, is increasingly attractive to investors. With a booming economy, construction companies have been busy and the need to become more efficient with time and money has created a gap for startups to fill.

Despite the activity in construction tech, Brick & Mortar has intentionally flown under the radar.1 However, now that the firm has closed its fund, Bechtel is ready to tell us more about how it operates.

A Look Inside Brick & Mortar

Brick & Mortar exclusively counts construction corporate strategics as its LPs, according to Bechtel.

Those LPs include the aforementioned Autodesk as well as Ardex, CEMEX, Ferguson Ventures, FMI, Glodon, Haskell, Hilti, Obayashi, Sidewalk Labs, and United Rentals. According to Brick & Mortar, all the LPs have the option 鈥渢o share information concerning challenges its organization faces; to collaborate on opportunities it sees; and to explore emerging technology solutions that might be available for proof-of-concept pilots, co-development, or commercial use.鈥� 2

As a Stanford-trained engineer, Bechtel ultimately joined and ran a medical device startup before becoming an angel investor. It was at that point he realized his passion for investing and focused his attention on putting money into other companies.

鈥淲hile angel investing across a wide variety of verticals, I observed that out of my portfolio of roughly forty companies, the Built World investments were standout performers and looked to be the start of a larger trend,鈥� Bechtel said. His first four construction tech investments were into the seed rounds of PlanGrid, , BuildingConnected, and . Bechtel acknowledges that his family name didn鈥檛 hurt in that it opened doors to deals involving investors who were somewhat intimidated by the highly regulated and complex construction industry.

鈥淚 got access to some pretty phenomenal deals from generalist, Tier 1 VCs who were looking at companies in the construction space but had limited knowledge of it,鈥� he said. 鈥淪o they鈥檇 reach out to me to assist with some of the deal flow and valuation and to be a value-add investor.鈥�

Over time, Bechtel realized that 鈥渋t wasn鈥檛 scaleable to be a generalist.鈥� He was also encouraged by the rapid growth, impact, and early success of the companies he鈥檇 backed. So in 2015, Brick & Mortar Ventures was born.

Bechtel is also a former classmate, and close friends, with , the co-founder of another venture firm in a similar space that also recently announced the close of a $503 million fund: . The pair even invested together for a while before deciding they were better suited to invest separately. While Brick & Mortar is focused more on construction tech, Fifth Wall invests in real estate tech so the two don鈥檛 really compete and actually often collaborate, according to Bechtel.

鈥淭here鈥檚 so much opportunity in these sectors so there鈥檚 not really a land grab yet,鈥� he told 附近上门 News. 鈥淓ventually as more capital comes to the scene and more people see the potential in the space, we鈥檒l see an increase in competition and valuations. For now, I believe we鈥檙e still in the early innings and we鈥檙e excited about the opportunities and value we can get as early-stage investors.鈥�

Since the initial closing of its current fund in January 2018, Brick & Mortar has built up a portfolio of 16 companies including ,,, , and. Looking ahead, the firm plans to continue to lead seed and Series A rounds with a focus on the U.S., Canada, Europe, and Australia. It typically invests between $1 million and $4 million into new deals but also reserves some capital for follow-on investments in its portfolio companies. The firm鈥檚 team of five consists of Bechtel, Alice Leung, Kaustubh Pandya, , and Austin Yount.

鈥淚n 2014, there were a handful of startups in the space, sales were slow and confidence that the construction industry was ready for change and would spend money on solutions,鈥� Bechtel told 附近上门 News. 鈥淏ut when we closed this fund, we had a backlog of 500 startups that we鈥檝e been tracking for several years. So we were able to hit the ground running. And now we鈥檙e seeing people who were cautious observers become fast followers.鈥�

In choosing investments, Bechtel said his firm studies the landscape and picks out the top performer in a space, pools its resources behind it in the form of capital, networks and relationships. Despite having industry players as LPs, Bechtel emphasizes Brick & Mortar is 鈥渘ot restricted on its investments at all by the desires of LPs.鈥�

鈥淭his is not a shared corporate venture office,鈥� he said. 鈥淚t鈥檚 a traditional institutional venture fund, and we鈥檒l deploy the funds as we see fit.鈥�

Startups See Advantages

From the perspective of the startup, there鈥檚 a clear advantage to having an investor that not only has firsthand industry experience but also connections (in the form of LPs) to so many potential customers. Bechtel observed that founders in the space 鈥渞eally like鈥� working with an investor who gets the space.

鈥淚 realized early on I was in a unique position to connect tech developers with industry users,鈥� he told 附近上门 News.

is a Potomac, Md.-based startup that specializes in pre-sale home renovation that just closed on a $7 million that was co-led by Brick & Mortar and , a Washington, D.C.-based firm that offers capital and advisory services for real-estate businesses.

Rick Rudman, CEO of Curbio, told 附近上门 News that it was obvious from his first meeting with Brick & Mortar that the firm was 鈥渄ifferent.鈥�

鈥淚nstead of just the usual business school crowd, sitting around the table were not only MBAs but also a team of people with deep expertise in all aspects of engineering and construction,鈥� Rudman said. 鈥淲hen it comes to innovative technology for the built word, Brick & Mortar has put together a serious team. Every VC firm claims to deliver more than just money. This is one of the few firms that actually has the expertise and connections to deliver on that promise.鈥�

Fundamentally, the time for such a step is right, said Bechtel, as the industry increasingly opens up to innovation.

鈥淲e no longer look like crazy people, being among the first to invest in this space,鈥� he said.

Illustration: