Construction tech firm Katerra turned a lot of heads earlier this year when it raised a giant $865M investment round led by the SoftBank Vision Fund. Katerra provided a suite of services like design, labor and construction management and material procurement. They focus on standardized processes and materials to create efficiencies between the design and construction processes.
Today Katerra announced that they are merging with Fields Construction Company, a construction management firm our of the Northeast.
There are obviously a lot of construction companies to choose from so I reached out to the Katerra crew and asked them what exactly they saw in Fields. Trevor Schick, who leads Katerra’s construction operations said:
“As a fully-integrated building solution for developers, we were looking for a partner who could help us expand our rapidly growing footprint. Fields’ well-established presence on the east coast and their commitment to innovation in the construction industry made partnering with them an easy choice so that together, we can speed up construction times and enter into new markets more easily.”
With a reported company valuation above $3 billion after the investment round, Katerra has a lot of equity to give. They could easily buy out many big construction firms just for their contracts. The technology and business model that they employ only stands to improve at scale. This move could also mean a shift away from a product and service provider for construction and design firms.
By increasing the amount of construction that they do, Katerra might risk competing with their clients. This could have a similar result to the pushback against Zillow’s move to buy and flip houses while selling advertising to brokers. But, if the technology that Katerra has developed is a way to significantly increase the margins associated with construction, it makes sense that they would want to invest some of there war chest in that area. If you have the best recipe, why not make the dish at home?