Darren Bechtel

Not too many years ago, investing in construction technology wasn’t a crowded field, to say the least.

However, Brick & Mortar Ventures’ Darren Bechtel used his generational family knowledge in the construction industry to create the contech-focused venture capital firm in 2015. The results have been exciting despite construction’s daunting complexity, COVID-19 shutdowns and macroeconomics, he said.

“Construction tech never really saw much of a slowdown or valuation resets compared to the broader tech landscape,” said Bechtel. “From the amount of capital deployed, number of deals being done, median round sizes and post-money valuations, they all continue moving up, because in venture the pendulum swings.”

Indeed, Brick & Mortar Ventures has seen much interest in its latest fund, which should close in 2023 in the neighborhood of $150 million, according to a source familiar with the matter.

In the last year, the contech VC firm has already invested out of its February 2022 fund in proptech startup Hypar, an AI design platform to automate conceptual design, estimation, building product configuration, and mechanical and structural engineering.

“We’re not doing AI for the sake of AI, but there’s some interesting companies that are really building custom-tailored solutions for construction,” said Bechtel. “Some are focusing on the design side and some on the scheduling side. A challenge with using off-the-shelf AI is that construction is an opaque industry based on tribal knowledge with a language of its own. That requires some fine-tuning of any of the foundational models.”

Additionally, the firm is entering the third year of its accelerator program, Formwork Labs, the first accelerator for architecture, engineering and construction-focused startups. Modeled after startup incubator Y Combinator, the accelerator has 10 companies in its portfolio and offers a $75,000 SAFE (or simple agreement for future equity) investment to the pre-seed startups.