Where does your Construction Tech startup play?
We think and strategize our roadmaps based on startup stages (Pre-Seed, Seed, Series A to God knows at this point), but sometimes, very little focus is given to market stages in strategizing. Understanding market stages and dynamics help the founders make the right decisions.
For simplicity, we can slice and dice one homogenous market into four different stages/ Qaudrents. Each Quadrant has its flavors, complexities, and priorities for resources.
Sometimes a startup can start in Q1, with time, go to or pivot to Q2 and end up in Q4.
Next-generation Disruptive tech (Q1): Very few players play in Q1. Though not generalizing, we mostly see two buckets of founders in this space:
1. Students/recently graduated/Academia from one the best universities working by themselves or in university incubators
2. Some Non- Construction R&D folks are trying to find their research application in the construction industry.
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Q1 can throw surprises that can rapidly change the course of the Industry. But Q1 has very high risk and low competition in general. If you’re in Q1, your priority show tech is viable, and there is some market demand. For funding, it’s better to chase Research grants and University incubators or some Angel investors than VCs, at least in the early stage. If the startup fails, don’t put your life savings and have a solid backup plan.
Early R&D Niche Markets (Q2): There are a lot of startups in this space, usually. The market is evolving for products, and it is typically a bit longer than Q3 or Q4 to find your PMF or earn revenue. If you show decent traction, you can get funded by VCs. As it takes a bit longer to find PMF, it is very critical to focus on your burn rate or don’t run out of cash.
Bigtech Dominated Space (Q3): No matter how hard Bigtech tries, there is always a segment of dissatisfied customers. It’s by virtue of Bigtech products that they can’t meet all the needs of all customers. If a startup can convert Bigtech unhappy customers into their customers by “Killer offering and Differentiator,” it is a win. However, VC funding for Q3 startup depends on the TAM size of unhappy customers.
Rapidly Evolving Crowded Market (Q4): Quadrant, where we see a lot of startup battles. It happens one, due to low barriers of entry for startups, and two, attractiveness to making huge money. If you’re in Q4, you must juggle many things simultaneously at a rapid pace. We see stories of VCs pumping millions to their portifolio startups to win market share even at high burn rates and marginal revenue.
Bain capital ventures have a couple of case studies and insight stories on this. I recommended looking into them.
