Boston has been Crane City for the last five years or more: construction everywhere you look, and detour signs, too.
Much less noticeable has been a boom in startups focused on buildings. Entrepreneurs are looking at a massive industry and seeing opportunity: Construction spending on private projects in the United States hit a record high of $1.25 trillion in December, according to the Commerce Department. And while that enormous number includes everything from architectural design to laying bricks, it doesn’t include the cost of renting out the space or managing it once the work is complete. That equals even more opportunity for entrepreneurs.
The venture capital firm Borealis Ventures says it is tracking more than 70 companies in the Boston area that are focused on construction, real estate technology, and “smart cities,” a term for applying software and sensors to gather data from the urban environment.
“The most common challenges across the world — sea level rise, urbanization, the affordability of housing, and everything in between — we see it all in Boston,” says Jesse Devitte, managing director at Borealis, based in Boston and Hanover, N.H. “Never before has our modern existence been under the pressure it is under today, with changes in the environment, and billions of people piling into cities. It creates a unique moment.”
Borealis is raising money for a new venture capital fund to invest in startups focused on “the built environment,” in Devitte’s words. The firm has been around since 2001, and many of its past investments have been in construction-related ventures.
Ready capital is always a factor in spurring entrepreneurship, but there are three other things that have created a strong foundation here for startups addressing the built environment. One is the presence, since the 1860s and 1870s, of architecture and urban planning departments at MIT and Harvard.
The second was the founding, in the 1980s and 1990s, of software companies such as PTC and SolidWorks (now part of Dassault Systemes) that created modeling software for industrial designers, and architects that shifted their work from blueprints to powerful workstations and, eventually, personal computers. Those companies spawned many other design- and construction-related startups.
The third factor that helped to create a strong foundation for startups was the establishment of a new meeting place in South Boston and a new “accelerator” program for student ventures at MIT, both in 2016. That fall, the California design software company Autodesk opened the BUILD Space in South Boston’s Drydock neighborhood. It hosts networking events related to design and architecture, and also provides workspace to a handful of fledgling companies, some of which Autodesk puts money into.
And in December 2016, MIT began operating the designX accelerator program to help would-be student entrepreneurs explore ideas tied to the built environment, and to potentially launch for-profit companies or nonprofit organizations.
At Autodesk, there are currently about a dozen startups in residence, Senior Director Rick Rundell said. Among them are Manufacton, a software outfit that helps construction companies track all of the materials and prefabricated elements required for a project; and Toggle, which aims to combine software and robots to build steel rebar structures — the skeleton inside concrete buildings — more efficiently.
DesignX at MIT is now incubating 10 student ventures, including AirWorks, which is deploying airborne drones to survey properties, and Spaceus, which wants to turn unused, street-level retail space into artist studios.
Architecture and urban planning have always been about “the interactions between clients, developers, cities, and citizens,” says Gilad Rosenzweig, executive director of designX. “Those interactions are not being automated, but technology is being introduced. We’re seeing lots of startups connecting those parties with each other.”
One example he cites is coUrbanize, a Boston startup founded by two MIT alumni to help real estate developers and cities gather input — and yes, complaints — from citizens about projects being built in their neighborhoods. Other local startups like HqO and Beco are trying to let building managers and tenants communicate more efficiently using those handheld computers we carry around with us all day. Doorbell is trying to do the same for residential tenants and landlords, making it easier to report a broken fridge or pay rent.
“People are choosing nowadays to rent more than ever,” says Ben Pleat, CEO of Boston-based Doorbell. “For landlords, apartment turnover costs and high, and tenant retention is difficult to boost.” So his startup is offering an app that Pleat says provides “a better experience to residents and provides a boost to profit for building owners.” Doorbell’s app is already in use at about a dozen different rental complexes in Boston and Worcester, Pleat says. The startup has nine employees.
Only slightly bigger, at 15 people, is Smartvid.io. It is creating software to analyze photos and videos taken on construction sites and highlight potential safety issues, like workers not wearing gloves or hard hats.
“Twenty percent of construction injuries happen because workers aren’t wearing gloves,” Smartvid.io CEO Josh Kanner says. “It represents over 70 percent of lost time and related costs. But it’s hard for safety personnel to be everywhere, seeing everything.”
Kanner acknowledges the construction industry historically has been a laggard when it comes to spending money on technological tools; according to the research firm Gartner, the construction sector spends about 1.2 percent of its revenue on information technology, which ranks it last among all industries.
But Kanner contends that if a new technology “helps with quality, safety, productivity, or cost, construction companies are very interested. It just needs to work really well and be simple to use.” Smartvid.io has so far raised $8 million from investors. Kanner’s last startup, Vela Systems, sold mobile software for construction project management. It raised less than $20 million and was acquired in 2012 by Autodesk for $76 million.
Kanner says he has been seeing an “uptick in the number of startups” focusing on the built environment, and Pleat notes that there are regular meetings of groups such as the Society for Construction Solutions and #BOSRETECH, focused on real estate technology.
“People are thinking about the future of the city,” Pleat says. “They’re realizing that real estate and the physical world and the technological world can all help each other out. That’s what we’re starting to see in Boston. You’re in retail space, residential space, or office space every day and every hour. Any changes you can make have a humongous impact.”Scott Kirsner can be reached at email@example.com. Follow him on Twitter @ScottKirsner.