Exploring the Dynamics of Entrepreneurship, Innovation and Investing in Construction Robotics

Abstract

Startups seeking scale often turn to venture capital (VC) for funding, gaining financial support, industry connections, and insights in exchange for equity. Transitioning from initial markets to mergers, acquisitions, IPOs, SPACs, or buyouts, startups face the dual potential for immense success or failure, a hallmark of the high-risk startup ecosystem. The construction industry, especially in the realm of technology startups like SaaS, is witnessing this trend. Unlike software-centric firms, construction robotics startups grapple with challenges posed by the need for physical, custom products, demand volatility, and lengthy development cycles. Venture capital funding is crucial for these 'deep tech' ventures. Still, it introduces the principal-agent issue, where aligning the entrepreneur's actions with the VC's interests is complicated by information asymmetry. VCs counter this through high-powered incentives, controlling rights, and staged investments. Despite the critical nature of this topic, academic research on VC impacts on hardware startups in the architecture, engineering, and construction (AEC) sector is sparse. Our research aims to fill this gap. We conducted 127 semi-structured and open-ended interviews with 95 individuals across Europe, North America, and other regions in 2022 and 2023. The resulting data, comprising over 90 hours of interviews and field notes, was analyzed using abductive thematic analysis, categorizing 2998 data segments into nine categories within three major themes. This analysis revealed five dimensions of VC's influence on construction robotics startups, highlighting misalignments and dynamic interactions. In preparation for journal publication, this research complements a parallel, data-centric quantitative study, enriching our understanding of this complex subject. Preprints of this research may be available upon request.