Bricks & Bytes Bulletin
INTELLIGENCE FOR CONSTRUCTION LEADERS

THIS WEEK’S INSIGHTS
State of Construction Tech 2026 – Inside Top VC’s Report

Patric Hellermann, General Partner at Foundamental, doesn’t do events. He said so himself in Paris. So when he showed up at Contech Connect last week to deliver a 30-minute keynote and then sat down with me for a fireside, it was worth paying attention.

The session was anchored to Foundamental’s newly released State of the Project Economy 2026 report, a 100-plus-page research document covering market context, structural demand drivers, capital flows, and what the firm is backing over the next few years. But the real substance came in the room, where Patric opened with a provocation that set the tone for everything that followed.

He hates the McKinsey productivity chart. Not the data. The diagnosis. The idea that construction’s productivity problem is fundamentally about process efficiency is, in his view, completely wrong. “Productivity in construction has nothing to do with efficiency. It has everything to do with standardization.” That reframe was the lens for the rest of the discussion.

Fireside chat with Patric. Image: Contech Connect

The Demand Picture Is Good. The Supply Story Is the Problem.

Global construction spend crossed $15 trillion in 2024, growing at around 5 to 6 percent annually. Infrastructure is pulling most of that. Gross fixed capital formation, which captures the total capital going into physical assets across Patric’s “project economy,” has grown 30 times since 1960, and construction tech investment added roughly $3 billion to the pile in 2025 alone.

The numbers look encouraging until you look at what’s happening to costs. US construction materials prices have doubled since 2020, with cement up 2.5 times and structural steel up twice over. Construction machinery is up 40 percent in the same period. Every major Western workforce is projected to shrink through 2040, and strip out China’s productivity gains from the global picture, and construction productivity in the West has gone essentially nowhere for two decades.

“Software, 2%,” Patric said, describing construction’s P&L breakdown. Men and materials each take 35 to 40 percent. Machines take around 10. Software barely registers. “Nobody cares if that one HR process in construction is 10% more efficient. It doesn’t show in the P&L.” The project economy moves atoms. Workflow optimization doesn’t shift that needle.

Construction’s real cost base isn’t software. It’s people, materials, and machines.

The supply-side bets that were supposed to fix this haven’t worked. 3D printing is out-invested and niche. Alternative materials are stalling, partly on regulation. Modular construction peaked at around 10 percent market share in its best markets before unit economics proved elusive, and the Foundamental report shows modular company formation collapsed from 22 new entrants in 2018 to just 4 by 2024. EquipmentShare’s January 2026 Nasdaq IPO at a roughly $6.4 billion valuation is the heavy equipment success story, but it’s largely a standalone.

Patric’s explanation for all of it: “We jumped to a higher unit of demand where there is no standardization.” Construction is already standardized, he argued, just at the lowest unit level: bricks, rebar, steel, nails, dowels, yellow machines. The mistake the industry keeps making is building premium supply and hoping demand follows.

Five Demand Drivers That Actually Match Where the Money Is Going

Rather than a thesis built around what construction should want, Patric laid out the five structural demand forces he sees as genuinely real and investable going into the next few years.

Reindustrialization is the first. Manufacturing capacity is coming back to the US and Europe, driven by semiconductor reshoring, energy dependency concerns, and coordinated industrial policy on both sides of the Atlantic. European manufacturing PMI crossed 50 for the first time since 2022 as a leading indicator of what’s coming.

Offshore production is being cut nearly in half as domestic and nearshore shares surge. The constraint, per the Foundamental data, is forty-seven percent of manufacturers are reshoring, but output is barely moving because delivery capacity is the actual bottleneck. That’s a genuine construction problem.

Data centers are a force we’ve covered closely here, including the IREN CEO deep dive on power scarcity and labour demand. Patric puts the CapEx figure at roughly $500 billion globally in 2026, with the sector projected to add 10 to 15 percent to the global construction TAM by 2030.

The downstream footprint of each facility is probably larger than the headline: grid upgrades, power generation, water systems, and heavy civil work all cascade off a single data center announcement. Hyperscalers and their EPC partners are now among the largest construction buyers in the world, which means a structurally different customer base for anyone selling into that cycle.

Data centers are no longer a niche asset class. They’re becoming one of the largest construction demand engines in the world.

Energy infrastructure follows directly from data centers, though the two are increasingly inseparable. Powering US data center expansion alone may require the equivalent of 35 nuclear plants’ worth of new generation. Europe is investing €1.4 trillion into its transmission and distribution grid through 2035.

We looked at this dynamic in detail when we covered how data center developers are building their own power plants rather than waiting on grid capacity that simply isn’t there. Equipment bottlenecks, with transformers and switchgear being monopolized by data center buildouts, are creating second-order opportunities across multiple infrastructure sectors.

Civil infrastructure is the most underappreciated of the five, publicly at least, despite being the largest single category of G20 investment spending. Cost inflation is eroding output per dollar of public investment. Rising public debt is forcing governments to bring in private capital, which changes procurement dynamics and creates genuine pull for ConTech that can demonstrate cost certainty and delivery performance.

Defense infrastructure rounds out the list as a spending supercycle that tends to get overlooked in construction tech conversations. The DoD spends roughly 40 percent more on maintaining existing systems than acquiring new ones. That operations-and-maintenance mandate is the underappreciated slice of the supercycle.

Defense demand is also structural rather than cyclical, which makes it a more durable wedge market than commercial construction for anyone trying to build a repeatable revenue base. The German fiscal pivot from March 2025, the €500 billion infrastructure fund with defense spending now exempt from constitutional borrowing limits, is the European

Where Foundamental Is Placing Its Bets

The five demand drivers are more than a market map. Patric framed them as the basis for four specific opportunity areas Foundamental is actively investing around, which the report labels as “de-bottlenecking the project economy.”

Data infrastructure for projects is the most foundational of the four. Construction generates enormous volumes of project data, but almost none of it flows in a standardized, interoperable way between stakeholders. Schedules, procurement records, RFIs, site conditions, and financial data sit in siloed formats across dozens of tools. The opportunity Patric sees is the infrastructure layer that makes the data usable across the project lifecycle. Think less “another dashboard” and more Visa-style rails for project information.

Robotics integration is where Patric is most pointed about what the market is getting wrong. The gap isn’t in robot hardware. There are credible bricklaying, concrete, and inspection platforms already in the field. What’s missing is the systems integration layer: the firms that assess a jobsite, specify the right hardware mix, deploy it, program it, and iterate as conditions change. Manufacturing solved this 35 years ago through specialist integrators. Construction hasn’t. That gap, in his view, is one of the clearest near-term openings in the space.

Pre-construction automation targets the phase where most project value is determined and most cost is locked in. Estimation, procurement planning, design coordination, and early-stage scheduling are still heavily manual in most firms, and errors made here compound through delivery.

Patric’s bet is that AI-assisted automation of these workflows, particularly estimation and constructability review, is both technically ready and commercially underserved. Ediphi, a Foundamental portfolio company, is one of the clearest examples of what that looks like in practice.

Working capital distribution is the sleeper theme. With roughly 10 billion invoices written across construction annually and trillions locked in the system at any given point, the industry’s cash flow problem is structural. Subcontractors routinely wait 60 to 90 days for payment on work already complete. Fintech has been largely orphaned as investor attention shifted to AI.

Patric’s view is that the cycle returns, and when it does, construction stands out as the most underserved category. The industry’s scale is enormous, its relationship with traditional financial institutions is thin, and the working capital problem is structural rather than cyclical.

The Framework: Three Archetypes Worth Building

This is where Patric’s thinking gets most useful for founders and corporate buyers alike.

He categorizes the companies worth building, or backing, into three archetypes. Synchronizers aggregate existing, standardized demand against fragmented supply. They don’t create new demand; they find the unit that already repeats everywhere and build infrastructure to serve it reliably.

Infra.Market, a Foundamental portfolio company operating in India, generates over $3 billion in revenue as a construction materials procurement platform. McDonald’s, to use Patric’s analogy, aggregates demand for fast food real estate; the individual restaurants do the work. Coca-Cola aggregates bottling capacity globally without owning the factories. “They own the brand above that, and the demand that is standardized comes to them.” The bottler takes the utilization risk; Coca-Cola owns the position.

The companies worth building fall into three camps: those that aggregate demand, standardize supply, or own the rails.

Synthesizers create new forms of supply for demand that already exists at scale. Goldbeck is his construction example: starting with parking garages in the 1960s, then warehouses, then office buildings, the company radically standardized each building type at the unit level the market actually wanted. SpaceX is the analog from outside construction: standardized launch, monopoly position.

Systematizers own the rails. Visa, Mastercard. In construction, this points to data infrastructure companies and fintech. The moat is the infrastructure, not the product sitting on top of it.

Those three archetypes map directly to the four opportunity areas covered in the section above, and the internal logic holds: Synchronizers own the demand aggregation play, Synthesizers own the standardized supply play, and Systematizers own the rails. We’ve explored the robotics integration argument in depth through our piece on winning business models in construction robotics, and it’s only gotten sharper since.

Capital Is Concentrating, and the Middle Is Orphaned

Venture cap/ital is back at roughly 2021 peak levels in absolute terms, but concentrated in ten times fewer companies. For founders, that creates two viable paths: build something civilization-scale and raise accordingly, or get to profitability fast on a tight capital base.

The $250 to 500 million exit band sits orphaned right now. No fund economics support it at scale. Patric thinks a dedicated third category of VC will emerge to serve it, and with AI reducing the cost to ship software dramatically, capital-efficient paths to those outcomes are more achievable than the current funding landscape suggests. The construction tech exits we’ve seen in the $50 to $300 million range in the last few years are the proof of concept for that thesis.

The through-line from the entire session: the demand is real, large, and increasingly standardized from the top down by infrastructure, defense, and the data center build-out. Founders who find the repeatable unit within that demand and build supply against it are the ones Patric is watching. The ones who build supply and hope demand finds them are repeating the mistakes of the last decade.

Watch the full Contech Connect session for Patric Hellermann’s full breakdown of the State of the Project Economy 2026 here.

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