Digital transformation has disrupted many sectors, but construction is not one of them. At least not yet, and several startups are trying to be the first to pull it off.
But the sector, especially in developing regions such as Latin America, has many issues to address. Infrastructure lags behind the needs of the region's population, and even today most construction work is done with pen and paper, only spreadsheets. Moreover, like other parts of the world, the sector has proven particularly resistant to adopting new technologies.
Argentinian startup Nuqlea, however, is taking a different approach to solving some of these problems. The company offers a B2B platform, Nuqlea Studio, which doubles as a marketplace and procurement portal for construction companies in Argentina, through which it hopes to build an ecosystem of partners to accelerate procurement and therefore the entire construction process.
Construction technology has a big chance to change things here. According to the Development Bank of Latin America and the Caribbean (CAF), around 120 million people in the region live in inadequate and informal housing – a significant figure given the region's total population of around 600 million. But as elsewhere, the construction sector is still highly fragmented, and productivity growth has stagnated.
Nuqlea seems to be hoping that its capital and asset-light model will help it survive the current investment climate. “We don't have our own inventory,” its CEO Gaston Remy told TechCrunch.
A capital-light approach is ideal these days – especially in Latin America, where capital availability is slightly reduced from 2021 onwards. For context, construction technology startups raised about $3 billion from 236 deals last year, but only 2.5% of these funds went to Latin American companies, Cemex Ventures reports.
Three-year-old Nuqlea, however, managed to get funding twice. After raising an initial seed round in 2022, it recently raised a $750,000 extension led by construction-focused VC firm Fundamental, TechCrunch has learned exclusively.
Fundamental has built its entire thesis on supporting early-stage construction tech startups, so it's no surprise that Nuclea Cap is coming to the table. The firm plans to use its latest $85 million in funding raised in 2022 to double down on historically neglected verticals and emerging regions like Latin America.
“This extension is as much about partnering with one of the most forward-thinking VCs in the space (…) as it is about funding,” Remy said in a statement. He added that the new capital will increase the company's footprint in Argentina and lay the foundation for international expansion.
Next on the company's roadmap are Brazil and Mexico, followed by Colombia, because they are geographically close and Nuqlea can leverage the presence of many of its partners, Remy said. These partners include builders, manufacturers, logistics companies and financial institutions.
In line with a16z's prediction that “every company will be a fintech company”, Nuqlea has plans to leverage financial institutions to help shareholders protect themselves from inflation and adhere to its mission of “uniting all players in the sector”.
Building an ecosystem
Nuqlea's executives have corporate track records (Remy co-founded the Argentine oil and gas company Vista, leading it to an IPO), but not in construction. But the CEO was able to use being new to the space as a strength, projecting himself as an outsider. His pitch says, “We might have a general transformational advantage with Nuclea as an articulator,” and it seems to have resonated. Since its inception, Nuqlea has launched nearly 50 construction companies and cooperatives.
“We believe Nuclea has become a B2B marketplus. It found a software-enabled way to allow manufacturers and distributors to create their own white-label and own channels, while allowing customers the simple white-glove experience of a one-stop procurement shop,” Fundamental said in a testimonial.
Nuqlea is also leveraging AI in a number of ways, from developing product matching and forecasting to coding. However, unlike other founders, Remi almost played down this aspect, focusing instead on the company's positioning as an ecosystem and connector. “We have very good technical tools, but our main definition is that these players participate and we express them. Technology is not the end, it is the tool that allows us to do it.
In fact, Remy seemed very animated when he talked about Nuqlea's social impact. Construction technology may have had a less-tangible impact than the large-scale food-aid program he led during the pandemic, but it's still top of mind for the CEO, who is proud of Nuqlea's involvement in building social housing.
Social housing aside, Remy knows Latin America's infrastructure needs and how construction technology can help build it more quickly. But more generally, he feels that bringing about a digital transformation in construction is a boon to society as a whole, as the cost of inefficiency in the traditional value chain is borne by the consumer.
Add in sustainability goals and it's not hard to see how construction technology can generate both revenue and impact. Let's hope it will.