This week sees the release of the latest State of built world tech report, published by noa, Europe’s largest built world VC investor,
Founded in 2019, noa (formerly A/O) focuses on technologies disrupting the real estate industry and built world, enabling its decarbonisation and positive transformation.
Its investment focus spans the sectors’ entire lifecycle, including supply chain, building design, construction, operations, and energy transition.
It’s a sizable data-driven report, so here I will highlight some of the key findings:
The resiliency of build world tech
The report characterises built world tech as resilient in 2024, outperforming wider markets and achieving triple-digit growth in sub-sectors that are vital to the fight against climate change. Globally, built world tech attracted $21.1 billion in 2024 until early November and is forecast to end the year with $24.3 billion.
Significantly, despite the global funding downturn, built world tech saw a smaller fall in venture capital investment of 7 per cent, outperforming sectors like fintech (-18 per cent) and broader climate tech (-23 per cent).
The sector’s resilience was driven by continued demand for decarbonisation solutions and strength in particular sub-sectors.
The state of built world vertical investment
Electrification
Total electrification investment was up 10 per cent, driven by a 40 per cent increase in venture funding for grid technologies.
However, building electrification hardware and installation has seen a 30 per cent drop in funding, due to tailwinds created by the European energy crisis and regional electricity market reforms in 2023 not being carried out as expected.
Robotics and automation
Overall, investment in industrial automation grew 61 per cent, driven by a 895 per cent jump in building operations robotics. AI advances across the economy have drastically reduced the cost and time to market of robotics manufacturing and the built world is now seeing positive economics for robotics in building operations and renewable energy construction.
Regulatory inconsistencies hamper net Zero goals
The reality is that the built world represents ~40 per cent of all CO2 emissions and it will simply not be possible to meet wider climate targets without decarbonising the built world.
However, in 2024, Europe continues to wrangle with an inconsistent regulatory landscape.
For example, Germany saw first the removal, then reinstatement, of generous incentives for residential retrofits, while the UK delayed its phase-out of gas boilers in new builds to 2035. Both policy shifts led to declines in funding for associated technologies.
Early-stage resilience
Deal sizes in built world tech companies increased across the board in 2024, despite lower deal volumes.
The US continues to lead with the largest median deal sizes across all funding stages. European Series B median deal size growth was also slower in Europe than in North America (127 per cent vs 152 per cent).
Series A funding rounds decreased in 2024:
American built world firms raised 7x the $1.9 billion capital raised in the UK, Europe’s largest hub for built world tech investment. The US also accounts for ~80 per cent of the funding of two of the best-performing sectors: industrial automation and risk management. In fact, the US dominates every theme in built world technology.
London still leads Europe
While the UK has seen a decline in built world funding, London remained the top city globally in terms of deal count and third for investment, ahead of New York and San Francisco. A large part of the UK’s success stems from owning 16 per cent of global capital allocation for the growing grid tech sector, by far the UK’s largest theme in 2024.
Gregory Dewerpe, Founder and Managing Partner at noa, said:
“Built world tech is at the forefront of our fight against climate change, and the sector has continued to attract investment, even in a challenging funding environment.
At noa, we’re proud to support the innovators leading this charge and recognise that sustained, long-term investment is crucial to overcoming the hurdles ahead, including regulatory changes and evolving market economics.”
Lead image: Freepik.