BuiltWorlds’ 2024 Venture & Investments Report says built environment venture capital activity remained strong in 2024, even as inflows declined and average round sizes normalized.
The report says the built environment VC market rebounded after two consecutive quarters of repressed activity. BuiltWorlds attributes this to a normalization in average venture capital round size.
BuiltWorlds Venture & Investments Analyst Cameron Mabley says the decline in capital inflows from 2023 to 2024 was driven by unusually large activity in late 2023, including $4.6 billion invested in five deals in Q3 2023 and $1.2 billion in Q4 2023.
Senior Director of Research Tyler Sewall says the 2024 normalization may reflect a reduced influence from macroeconomic factors and a shift toward private-sector technological advancements and a “return to quality” investor mentality.
Venture activity increased in several regions, including Central Europe, the Nordic region, Australia, India, and Singapore.
The DACH region, meaning Germany, Switzerland, and Austria, posted a 109.8% year-over-year increase in funding. The report links this growth to climate tech and modular construction startups aimed at addressing the housing crisis.
The UK saw an 86% year-over-year drop in activity. The report cites rising interest rates, economic uncertainty, geopolitical tensions, new compliance requirements, and higher capital gains taxes as contributing factors.
Infrastructure tech and building tech continued to receive most built environment technology VC inflows.
Infrastructure tech inflows declined from $11.9 billion to $7.9 billion, but deal volume rose slightly from 215 to 217. The report says this growth is linked to the Bipartisan Infrastructure Law and the Inflation Reduction Act in the U.S.
Mabley says grid-scale energy transition startups attracted the most infrastructure tech capital. Tech-enabled utilities startups also saw strong traction, especially in broadband and telecom.
Building tech inflows fell 15.6% year over year, from $5.6 billion to $4.8 billion. The number of rounds increased from 196 to 247.
The report says building tech activity accelerated as architects and engineers adopted generative AI, asset owners sought better space utilization, and materials suppliers invested in procurement improvements and sustainable building products.
Mabley says the round increase was fueled by interest in panelized prefabrication, volumetric modular construction, building energy alternatives, and tech-enabled HVAC systems.
BuiltWorlds says more information will be available at its Venture West event in San Francisco, taking place April 8-10.