AEC VC Patric Hellermann

In this episode of the AEC_VC podcast, I dig into the concept of "outcome-as-a-service" - a business model that is enabling a new breed of startups to build massive companies in the architecture, engineering, construction and supply chain sectors.



I explain how outcome-as-a-service differs from SaaS, targeting huge cost centers by guaranteeing project results vs just providing tools. I lay out the attributes of companies winning with this model, from how they align with project budgets and buying processes, to how they leverage technology behind the scenes to deliver an end service.



Finally, I share examples of trailblazing companies putting outcome-as-a-service into practice across robotics, managed marketplaces, energy audits, engineering services, and contractor platforms. An old-school approach that is unlocking new opportunities - founders, take note!



(00:00) Summary/Introduction

(01:53) Services are the norm in AECS: Here's why

(03:15) The difference to SaaS

(07:00) THINK: P&L and purchasing

(08:11) Framework: The attributes of service winners in AECS

(09:50) Examples

In this episode of my AEC_VC podcast, I share my "Hidden in spite of obvious" framework for identifying contrarian investment opportunities in the architecture, engineering, and construction (AEC) sectors. I discuss how the most promising early-stage companies I invest in often pursue ideas that are obvious to industry insiders but remain hidden from outsiders. I emphasize the importance of seeking strong signals, such as customer adoption and cash flow, rather than vanity metrics like fundraising hype. I also encourage founders to develop a deep understanding of the industry's nuances to spot these hidden gems. Tune in to learn how I uncover the next game-changing opportunities in AEC and how you can too.



(00:00) Summary of this episode

(00:34) Introduction

(00:55) B2B / AEC has many nuances

(02:42) My B2B-vertical framework

(06:48) Strong Signals v. Poor Signals

(10:38) Empathy matters early!

(11:22) Founders in AEC: Follow my Framework

In this podcast episode I talk about the following topics:



• My take on Schneider Electric's reported $16 billion acquisition of Bentley Systems

• My views on the rise of "infraplatform" titans combining design software and operational platforms

• The massive global infrastructure upgrade cycle that I believe is driving this strategic rationale

• The bold thesis I see of controlling authoring to dictate infrastructure hardware choices

• The risks I foresee around integration, valuation, and executing this mega-merger of contrasting assets



Timestamps:

(03:20) Design software for infrastructure and data centers

(05:52) Why now?

(08:32) Why Bentley?

(10:22) Why Schneider Electric?

(11:49) A Great Thesis!

(13:54) It's A Strategic Deal

(15:40) Implication: The CAD War Is On

In this episode, I share my unique macro thesis on the AEC (Architecture, Engineering, Construction) technology space. Key highlights include:




The distinction between "real world" AEC tech versus property tech, and why the fundamentals of each are vastly different


How AEC tech is thriving counter-cyclically, with funding tripling since 2021 and 6x growth over the past 5-6 years


The universal pattern I've observed across sectors - once a space hits $5 billion in VC, it typically reaches $50 billion in 6-8 years


The critical importance of building robust data infrastructure as the foundation for unlocking the next wave of innovation


The potential for significant value creation, with only 16 AEC tech unicorns today but over 100 more expected to emerge



Don't miss this insightful look into the macro trends shaping the future of the AEC technology landscape.

Today, we revisit our very first topic on AEC_VC, cavity insulation in Europe, with a fresh perspective. After 18 months, our backtesting confirms: this insulation opportunity has an outstanding market potential and exceptional margins and cash flows. It has shown me that it can support the next AEC unicorn.


Flashback: The insulation opportunity
A $100 billion market
Exceptional margins and cash flows available
Highly standardizable and repeatable
The end game: Cloud installation as an infrastructure



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