Author name: Owen Drury

INDUSTRY INSIGHTSHow to burn £10m in one year – Lessons from Modulous’ Downfall The story of Modulous falling into Liquidation in November 2023 is one that surprised the entire construction tech scene.  How could a company burn through over £10m in cash in just over a year, whilst only generating £92,000 in revenue? The answer?  Lack of focus, investor misalignment and lack of transparency. But with every downfall comes a bunch of lessons.  We were lucky enough to be joined by their ex Client Accounts Director who provided an inside-view on what happened during Modulous’ downfall. You can listen to the full episode here.   The Promise – Transforming Modular Residential Construction Modulous aimed to transform the construction industry by developing a software tool that could streamline the design and planning process for residential projects. Alongside this, the company worked on creating a modular hardware system that could be efficiently manufactured and assembled on-site. The combination of these solutions held the potential to significantly reduce construction time and costs while improving quality and sustainability.   Funding, Growth and Expansion Fueled by investor interest and a £10 million Series A funding round, Modulous experienced rapid growth.The company embarked on a hiring spree, expanding its team to around 60 employees within a short period. Simultaneously, Modulous made the decision to expand into the US market, despite the challenges posed by differences in building regulations and market dynamics between the UK and the US.   The Cracks Begin To Show As Modulous grew, several warning signs emerged. The company struggled to maintain focus, with resources divided between software development, hardware design, and market expansion. The skillsets of some team members were misaligned with the company’s immediate needs, leading to inefficiencies and communication breakdowns. “So you had a large development team, software development team working on this when actually the market outside may have been starting to come up with answers a lot faster. So, but I’m, you know, again, probably being horribly over simplistic because, you know, that software team moved heaven and earth to develop things over a short period of time.” Moreover, the pressure to secure additional funding and demonstrate progress to investors led to questionable decision-making and a lack of transparency within the organization. “Well, there may be an argument to say, you know, how involved were the investors in keeping on top of stuff to actually be able to do this? And how honest were the founders being with the investors about that, if they’re not so closely involved day to day.”   The Downfall: Modulus Enters Liquidation The cracks in Modulous’ foundation began to show when the company faced delays in design and manufacturing, leading to cost overruns and missed deadlines on pilot projects. As the company burned through its funding at an alarming rate, it resorted to delaying staff salaries and pension payments. In November 2023, just 15 months after its Series A funding round, Modulous entered liquidation, leaving employees and investors in shock.   Lessons For The Future The collapse of Modulous offers valuable lessons for industrialized construction startups. here are the four key lessons learned from Modulous’ journey:   Focus is crucial Startups must maintain a clear focus and avoid overextending their resources across too many initiatives simultaneously. Modulous struggled to balance its efforts between software development, hardware design, and market expansion, ultimately leading to a lack of focus and efficiency.   Honest communication Transparency and open communication with employees and investors are essential, particularly during challenging times. As Modulous faced delays and financial struggles, a lack of transparency within the organization contributed to its collapse.   Manage investor expectations Startups must set realistic goals and manage investor expectations to avoid undue pressure that can lead to poor decision-making. Modulous’ rapid growth and expansion, fueled by investor interest, created pressure that ultimately impacted the company’s stability.   Align skills with needs Hiring the right people with the appropriate skills and experience is critical for success. Modulous experienced challenges when the skillsets of some team members were misaligned with the company’s immediate needs, leading to inefficiencies and communication breakdowns. The story of Modulous serves as a cautionary tale for industrialized construction startups. While the company’s vision was compelling, its rapid growth, lack of focus, and internal challenges ultimately led to its downfall. As the industry moves forward, it is essential to heed the lessons learned from Modulous’ experience. Interested in learning more? Check out the full episode with Chris Spiceley 👇 Listen Now   WEEKLY MUSINGSAI, deep tech & construction robotics Building with A.I.? Don’t wing it. Nate Fuller on LinkedIn: Essential Questions to Ask Before Hiring an A.I. Company Is your A.I. provider the real deal? For construction companies—and really any industry—getting this right is crucial. It starts with asking the right… www.linkedin.com/posts/nate-fuller_essential-questions-to-ask-before-hiring-activity-7201593957204566017-qi2A?utm_source=share&utm_medium=member_desktop Lost in deep tech translation Michael Jackson on LinkedIn: #vc #venturecapital #startups #entrepreneurs #entrepreneurship #tech… | 17 comments That moment when an LP who can’t even figure out how Docusign works sends you “hot deeptech dealflow” from some of his old banker friends. 🙃 #vc… | 17 comments on LinkedIn www.linkedin.com/posts/michaeljacksonvc_vc-venturecapital-startups-activity-7206929847795728386-iqpE?utm_source=share&utm_medium=member_desktop Robots to the rescue Jake Hall on LinkedIn: #construction #manufacturing #robot #constructionindustry #robotics… | 73 comments The #construction industry is facing 𝟓𝟓𝟎,𝟎𝟎𝟎 𝐨𝐩𝐞𝐧 𝐣𝐨𝐛𝐬. Robots and Automation are being developed to fill the labor gap and create an attractive… | 73 comments on LinkedIn www.linkedin.com/posts/jacobrhall_construction-manufacturing-robot-activity-7206641411633401857-fExD?utm_source=share&utm_medium=member_desktop   RESEARCH Sustainable Construction & Modern Modular Living 011h – Accelerating The Sustainable Construction 011h optimizes build-to-rent development through a cloud off-site construction network, utilizing flat panels and pods crafted from engineered timber and CLT to streamline project execution. The company’s successful delivery of projects for industry leaders like Aedas Homes and Culmia has garnered investor interest. As they continue to showcase their impact and sustainability efforts at industry events, 011h is poised to capture a growing share of the construction market. To get early access to the full reports (coming soon) sign up here. Note, this waitlist will CLOSE at 25 members. Don’t miss

INDUSTRY INSIGHTThe Rise of Robotics in Construction: Insights for Startups and Investors In May, we travelled to Amsterdam. After sitting down with one of the most fascinating CEOs we’ve had on the show over the last 2 years, it was obvious to us that not all founders are created equal. Salar al Khafaji is the Founder and CEO of Monumental. A brick-laying robotics company backed by some of the greatest investors in construction technology. Although this post does not reveal Salar’s journey (we will soon release a series of videos on that topic), our trip, along with some episodes featuring our friends at Foundamental, sparked our curiosity in construction robotics and served as the inspiration for this post.   What Investor’s Look For In Robotics Companies: In April, on Bricks & Bytes, we discussed robotics with Patric Hellermann of Foundamental. Here are some of the points that transpired from our discussion. When evaluating construction trades ripe for robotic automation, investors look for:   Product-Centric Founders Investors seek founders with a strong product mindset who can componentise their technology stack and create modular, scalable solutions.  “The ideal background is a software and product background because it allows you to componentize a platform. And it allows you to have a mindset of automating just enough, but not everything.”   A Granular Focus Startups that target specific, granular parts of the construction workflow and build initial capabilities around them are more attractive to investors. This focused approach allows companies to develop expertise and establish a strong foundation for future expansion. In addition, investors consider the following characteristics: Controlled environments with highly repeatable motions Trades requiring no more than two axes of motion Tasks where worker safety is a concern, driving faster adoption Activities prone to causing frequent worker injuries, such as repetitive bending Applications with simple geometries and large, uniform surfaces   Outcome-Oriented Business Models. Investors favor startups that sell access to their robots rather than the robots themselves. By offering robotics-as-a-service or acting as a robotic subcontractor, companies can capture more value and scale their operations more effectively.   3x Winning Business Models For Robotics Getting the business model right is essential to success. It requires unconventional thinking, not simply selling robots to contractors in the hope that your robotics company will succeed. Martin and Owen with Sebastian (Co-Founder and CTO) and Salar (Co-Founder and CEO) of Monumental So far we have discovered that there are three primary business models for robotics companies in the construction industry: Selling Robots Outright. While selling robots directly to contractors is an option, it may not be the most scalable or profitable approach. Offering Robots-as-a-Service. In this model, the startup owns and maintains the robots, providing access to contractors on a subscription or pay-per-use basis. This approach reduces upfront costs for contractors and allows the startup to maintain control over the technology. Acting as a Robotic Subcontractor. Perhaps the most promising model is for the startup to act as a robotic subcontractor, providing the automated service itself. This approach captures the most value and mirrors how human subcontractors operate today. In the long-term, a hybrid model that combines in-house service provision in major cities with franchising to partners in other regions could offer the best of both worlds. Robotics in construction is still in it’s infancy. But there has been a huge influx in funding over the last few years. The business models noted above are what we know so far, but that’s not to say as robotics become the norm, the winning business model develops into some different altogether.   How To Build a Winning Robotics Company The rise of robotics in construction presents a transformative opportunity for startups, investors, and the industry as a whole. Robotics has the potential to revolutionise the way we build by addressing labor shortages, delivering predictable outcomes, and leveraging technological advancements. As the industry evolves, the startups to watch will embrace a product-centric approach, focus on granular problem-solving, and adopt scalable business models. To build a successful robotics company in the construction industry, startups should: Embrace a product mindset rather than an automation-centric approach Target granular parts of the workflow to build initial capabilities Componentise the technology stack for reuse and expansion Sell access to the robot rather than the robot itself Prioritize repeatability over cutting-edge AI applications With the right strategies and a deep understanding of the construction landscape, the future of robotics in this sector is bright, promising a new era of efficiency, safety, and innovation.   WEEKLY MUSINGSData Woes, Explaining Tech, and Building Big in India A.I. is cool, but bad data in = bad data out. Erin Khan on LinkedIn: #data #showerthoughts #contech #ai #again #aec #constructiondata… | 21 comments We’re transitioning from, “there’s an app for that” to, “there’s an A.I. for that” – which should make us really think twice about the integrity of our data in construction… | 21 comments on LinkedIn www.linkedin.com/posts/erin-khan-655a761a_data-showerthoughts-contech-activity-7204513805656080387-A_Lw?utm_source=share&utm_medium=member_desktop Next challenge: explaining the internet to pigeons. I just had a call with a customer who asked me what a “cloud” is. Working with contractors is going to make me a great father one day. I’ve become a pro and explaining things at an elementary level while simultaneously making them feel smart. — AEC Technology Dashboard (@AEC_Tech_Dash) Jun 6, 2024 Big money for big builds. MARS doubles down on India’s Infra.Market with new $50M investment | TechCrunch Infra.Market, an Indian startup that helps construction and real estate firms procure materials, has raised $50M from MARS Unicorn Fund. techcrunch.com/2024/05/28/mars-doubles-down-on-indias-infra-market-with-new-50m-investment/?   RESEARCH Bricklaying Bots & EV Charging Rugged Robotics – Modernised Layout Processes Rugged Robotics is modernising construction layout processes through their full-service platform operated by skilled experts. By leveraging robotic automation, they deliver ultra-fast, precise layouts with exceptional design fidelity. Their solution captures even the most intricate geometries, provides actionable data for installation clarity, and lays out all trades in a single pass. Rugged Robotics’ team brings a deep understanding of building control and runway requirements to ensure optimised