Avvir, a start-up that makes technology to catch construction mistakes, just raised $10 million from investors. Trust Ventures led the round, while Tekfen Ventures, Khosla Ventures, and MetaProp also participated. This brings the start-up's total funding to date to roughly $15 million and reportedly brings the company's valuation to $40 million.
The construction technology vertical of the larger proptech sector has been gaining steam. What does more innovation in construction mean for investors and homebuyers?
What is Avvir up to?
Avvir's platform is designed to catch mistakes as construction is underway and to monitor budgeting and project scheduling. The company says that it can detect issues such as unlevel floors within one-eighth inch of accuracy.
Here's how it works:
- Step 1: Customers send a digital model of their project to Avvir.
- Step 2: Avvir deploys mobile lasers on-site.
- Step 3: The lasers scan the project as it's happening to compare to the digital model. This is done in tandem with photo comparisons.
Avvir also provides a "heat map" to show what areas of the project haven't started, are in progress, or are completed. This helps parties involved track project percentage of completion progress, among other things.
The cost of construction mistakes
According to Autodesk (NASDAQ: ADSK), it's estimated that nonproductive activities, such as looking for project information, conflict resolution, and dealing with errors and rework, cost the U.S. construction sector over $177 billion in labor in 2018. Put another way, construction industry professionals spend around 5% of their time on these nonproductive types of activities.
The next level for Avvir
While Avvir's clear value-proposition is to prevent mistakes and to keep projects on time, the company is also trying to be useful post-construction.
To this point, Avvir's CEO Raffi Holzer told VentureBeat: "Facility managers and building owners typically [don't] have an accurate set of building plans off of which they could manage or plan renovations of their built assets...Avvir plans to become a true construction information platform, taking unstructured information from the field, structuring and analyzing it, and then enabling clients to take action on it, either within Avvir or in any of the software tools they already use."
The $10 million in funding will reportedly mainly go toward increasing staffing and technology development. The company currently has 18 employees and is doing just under $1.5 million in annual recurring revenue. Holzer expects that recurring revenue figure to roughly triple by next year. Avvir is currently working with a dozen different customers and partners, including robotics firm Boston Dynamics.
The Millionacres bottom line: What all this construction technology adoption means
Technology is adapting to fix many of the construction industry's biggest problems (and expenses), which include productivity issues, safety concerns, rising material costs, labor shortages, and more. These industry-related issues, paired with a housing shortage, have created the perfect storm for adoption of construction technology solutions.
Moving forward, we should expect to see construction costs go down in the long run, which would in theory make property more affordable.