Despite a recent uptick in private financing and M&A activity, the construction industry remains a laggard in terms of technology adoption. A number of platforms and point solutions have emerged and are bringing traditionally paper-based processes online, but much innovation remains to come. Many stakeholders stand to benefit from the digitization of construction workflows, including contractors, designers, suppliers and other service organizations. As these transformations occur, truly vertically integrated platforms will emerge. Every step in the value chain from ideation to design to construction will benefit and be capable of sharing information to reduce costs and expedite build timelines. Accounting / ERP systems, BIM platforms, project management suites and supply chain providers are a few of the vendors driving change within the industry by digitizing documentation, communication, imaging and data synchronization. Catalyst recently partnered with eSUB and is excited to participate in the next phase of industry innovation. At Catalyst, we employ a proactive, research-based approach to investing, targeting sectors experiencing outstanding growth. If you are an owner, operator or investor in a growth stage Construction Tech company, we would like to hear from you. Please send inquiries and business plans to jackson@catalyst.com.

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CONSTRUCTION TECH PRIMER
Jackson Evans, Susan Bihler
August 2019

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INTRODUCTION
As a follow-up to Catalyst’s 2017 Real Estate Tech report, this primer takes a deeper dive into the
Construction Tech space and serves as an introduction to, and overview of, the market and landscape
Note: Red outline and dark grey represent areas covered in this report.
Real Estate Asset Lifecycle Industry Construction or Disruption? Accounting systems with
rudimentary databases and
logging systems moved
processes online but required
manual entry and duplication
Cloud software and mobility
tools allowed historically
siloed data to be accessed in
the office and the field but IT
investment remained limited
Robust API strategies, vertical
platforms and enhanced user
interfaces are driving
adoption and integration
along the value chain
+ Second generation owners are investing in technology
and bringing more business online
+ Private investment is fueling innovation and fostering
healthy competition and consolidation
+ Lower than average IT spend (~1% of revenue) across
the industry presents a large opportunity for disruption
‒ Changing behavior remains a significant barrier, leading
to lack of implementation by customers and high churn
‒ Complex workstreams lead to breakdowns in
communication and the return to offline processes
‒ Siloed stakeholders are resistant to share information
with other business applications

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2019 U.S. Construction Technology Spend ($MM)
Jan - May 2019 Total Private Construction Spend Jan - May 2019 Total Public Construction Spend
Non-Residential 183,200$ Residential 196,252$ Non-Residential 115,696$ Residential 2,426$
Power 38,596 Highway and street 33,600
Commercial 31,481 Educational 28,871
Manufacturing 27,591 Transportation 13,839
Office 27,038 Sewage and waste disposal 9,395
Other 58,494 Other 29,991
Total Software Spend:
Total H1 2019 Construction Spend 497,574$
Annualized 1,194,178$
x 1% Technology Spend 1.0%
Source: McKinsey & Company -Seizing Opportunity in Today's Construction Technology Ecosystem, U.S. Census.
$11,942 MM
▪ Productivity
▪ Risk Mgmt
▪ Scheduling
▪ Project Mgmt
▪ Bidding
▪ Workflow
INDUSTRY OVERVIEW
Industry Timeline
Market Sizing (TAM)
Pre 2000
2000 – 2010
2010 – 2020
Use Cases
▪ Payments
▪ Simulation
▪ Safety
▪ Fabrication
▪ Inspection
▪ Design
Technology begins to penetrate the industry and
horizontal ERP / business management applications are
implemented at the corporate level
New-generation business owners develop rudimentary
vertical applications for the construction industry to
automate bidding, documentation, design and payment
Paper forms, receipts and trust are the basis for
business operations leading to inefficient
projects, disputes and lost dollars
IT budgets are non-existent in an industry already
operating on thin margins
Smartphones and tablets, combined with ubiquitous
wireless coverage, begin to enhance communications
and begets fully vertically integrated platforms
Cheaper, lighter technology solutions are adopted but
tech spend remains a low budget item

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A MARKET UNDER CONSTRUCTION
Note: This landscape is intended to be a representative sampling and is not an extensive list.
POINTSOLUTIONSSYSTEMSOFRECORD
CORPORATE AND ENTERPRISE GENERAL AND SUB-CONTRACTORS
Accounting / ERP Project Management
Field ToolsMarketplaces
Building and Design
Additional Assessment Tools

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CONSOLIDATION – BUY, BUILD OR PARTNER
As real estate and construction incumbents continue to innovate and a new generation of CEOs emerges,
technology will become an integral part of all businesses, accomplished by buying, building or partnering
▪ An increase in recent financings and acquisitions in the construction tech space has allowed players to quickly assemble large
portfolios of solutions and immediately add scale and a competitive advantage
▪ Partner and integration strategies remain the more cost effective growth outlet given the high multiples that vertical software
providers demand in today’s market
▪ Acquiring smaller point solutions for talent and IP remain viable strategies in a space where even small margin improvements or
time savings are highly valuable
▪ Increasing technical debt amongst legacy providers will open the door for more nimble, cloud-based systems built on modern
architectures
▪ Despite higher startup costs, building and iterating on new features and functionality will create a competitive moat and drive
upsell along the construction value chain
▪ Proprietary connectors and modern, easy to use interfaces must be consistently iterated to maintain quick adoption and high
usage rates
▪ API and integration strategies will benefit players attempting to infiltrate highly regulated sub-sectors of the construction market
and will enable quick entry into additional lines of business
▪ A new wave of companies will emerge as larger systems of record develop application ecosystems capable of bi-directional
information sharing
▪ As software becomes more ubiquitous and tailor-made for all stakeholders, rather than “pushed down” from decision makers, APIs
will be necessary to create a vertically integrated system and to maintain efficient workflows

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Rounds out Trimble’s product suite by adding more complete and integrated project,
jobsite and business workflows
Integrates the owner, program manager and contractor workflows into the broader
Trimble offering leading to faster payments and increased productivity
Adds bid management, risk analysis and other preconstruction solutions to Autodesk's
construction portfolio
PlanGrid brings real-time access to project plans and adds additional drawing tool
functionality to Autodesk’s BIM platform
Complements Oracle’s Primavera project and risk management platform and provides
access to construction clients (contractors and developers)
Adds project collaboration and lifecycle visibility to Oracle’s existing suite creating a truly
end-to-end construction platform
Addition of construction bid management further bolsters Roper’s suite of cloud-based
network collaboration software
Broadly increases Roper’s application software reach by adding project-based
functionality capable of serving government contractors and professional services firms
Adds mobile time tracking to the Jonas software portfolio
Expands the vertical capability of the Constellation suite of enterprise management
software
PLATFORMS EXPANDING
Company Key Acquisitions & Rationale Other Acquisitions
Source: Company press releases.

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CONSTRUCTION TECH 2.0
Emerging services previously constrained by technology limitations will be enabled by advances in
hardware and software capabilities
Peripheral Devices
New Construction
Edge Computing
▪ Field workers and human-dependent service businesses will save time and reduce costs by utilizing remote devices
to collect and share information and automate processes
▪ Drones, cameras and smart sensors will collect valuable data capable of reducing errors and saving costs
▪ The increased viability and use of pre-fabrication will result in more precise and efficient projects
▪ As BIM, and CAD, programs add functionality, the entire construction process from design to completion will be
vertically integrated, leading to more informed contractors (both general and sub)
▪ Ubiquitous high-speed internet connections and heightened local compute resources will bring additional
technology into the field enhancing communication and better informing decision makers
▪ Smart and integrated building systems will reduce change order costs and allow for predictive maintenance

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Please send any inquiries to jackson@catalyst.com