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State of
Built World Tech
A new normal for built world tech
Despite remaining resilient relative to other tech verticals, funding for built world tech is expected to end the year 5% down. Seed, Series B and Series C investment has recovered well from the 2023 crash while the overall sector investment decline has hit Series A the hardest. Early-stage funding in North America sees slight recovery, but continued decline in Europe. Europe’s shows more resilience to later-stage market though a significant investment gap remains.
of ageing grid infrastructure Europe and North America have the oldest power grids in the world, at 45-50 and 35-40 years respectively [4]. Comparatively, China’s grid is just 15-20 years old. Meeting growing electricity demand will require both new capital upgrades and grid flexibility services to ease pressure on existing grid infrastructure.
Source: Goldman Sachs
$tn
to retrofit the built world
Combined, over $94tn will need to be spent to achieve a net zero built world by 2050, with $41tn spent on buildings alone [5]. In Europe, 80% of the building stock that will stand in 2050 has already been constructed [6], making the retrofitting of existing buildings through energy efficiency and electrification measures key.
Source: noa analysis, McKinsey, UNEP World GBC
$187tn
in new construction
A rising global population and growing urbanisation will see $187tn spent on the construction of new built world assets from 2020-2050 [7]. Distribution will vary geographically: 80% of existing buildings in Europe may be standing in 2050 but 80% of the African building stock is not yet built [8]. Prioritising carbon neutral or negative development will be critical.
Source: A/O Research
Built world tech remains resilient
Following the highs of 2021/22 and a 24% fall in funding last year, announced 2024 funding rounds confirm a new normal for built world tech investment. While Q1-24 volumes increased by nearly half relative to Q1-23, early signs of recovery failed to materialise further into the year, with the first half of 2024 up 13% on H1-23. Announced funding rounds for Q4-24 of $7.1bn indicate a strong uptick in dollars invested towards the end of this year, but investor hesitancy surrounding the US elections means volumes still sit below the $7.6bn invested in Q4-23.
All VC
YoY
0%
3yr CAGR
-23%
5yr CAGR
0%
FinTech
YoY
-16%
3yr CAGR
-30%
5yr CAGR
-2%
Climate
YoY
-20%
3yr CAGR
-19%
5yr CAGR
12%
Clean Mobility
YoY
-20%
3yr CAGR
-25%
5yr CAGR
-12%
Built World
All
YoY
-7%
3yr CAGR
-12%
3yr CAGR
-5%
Climate themes
YoY
-7%
3yr CAGR
1%
5yr CAGR
25%
Fastest growing Pre-Seed and Seed Themes
Retrofit installers stand out this year as the strongest built world investment theme – both in terms of total venture dollars invested and early stage deal count growth. Other fast growing themes include: earth observation, grid storage, infrastructure monitoring and renewable energy procurement. Meanwhile, building water efficiency, building design and heat pump hardware remain significantly underinvested relative to potential climate impact.
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European dollars
contract
Last year saw European built world tech dollars remain broadly flat on the year prior, while early stage dollars reached parity with North America for the first time. This year, however, has seen a sharp drop in funding for early stage European tech, while later stage funding across both markets has reverted back to pre 2021/2022 levels.
US market sees 14% uptick, while Germany drops by over 40%
Top 10 ranking remains broadly the same this year, with France, Sweden, and Canada showing the greatest annual growth. Longer term, the UK and Germany have seen the greatest growth. London continues to be the top city for deal count, while New York is expected to see attract the highest investment with +$1.9bn.
