Alasco — investing into the construction industry’s next-generation software solution
A huge gap in a large market addressed by the perfect team
Alasco recently announced a seed investment round of several million euros led by HV, alongside Picus Capital and the founders of FlixBus. This continues HV’s series of investments in the broader PropTech space but is the first B2B software investment in the industry for the fund. As my focus has thus far been on mass-market consumer deals, one might wonder what may have gotten HV so excited about this deal, so let me share the rationale here.
Generally, HV’s approach to VC is to look for gaping holes in large open markets with a fully committed team that goes after this opportunity in a smart way. Having witnessed the effectiveness of this approach in deals such as Zalando, HelloFresh, Quandoo, Scalable Capital, and so many other great companies, the same thinking is applied to all large opportunities that come our way. In a nutshell Alasco, in our view, (1) addresses a huge market with really big challenges and pain points, (2) delivers a strong product proposition from day one with very high potential to develop from there, (3) has a real chance to become the key building block in the software landscape of the construction industry and (4) is led by an exceptional team with a high level of expertise, dedication, commitment and trust.
(1) The market
The multibillion euro construction industry still sees cost explosions and stagnating productivity as illustrated by this graph:
This is clearly visible for and felt by everybody dealing with the industry, from big public projects to people trying to refurbish their apartment. This increasingly generates significant challenges on all fronts. A big contributor to such challenges will be technology, just as has been the case with so many other industries. Most of the current activity focuses on operational/ technical streams of the industry, from project management tools to 3D printing. In contrast, there is surprisingly little activity in the area of financial streams. But in our view a lot can be gained by addressing everyday pain points in existing approaches and processes.
(2) The product proposition
Alasco’s initial value proposition tackles the financial streams in construction projects. It digitizes all information and processes and builds a central source of information for all stakeholders. Looking at the solutions in operation today — mainly paper communication with hand written edits, back and forth scanning/ printing, Excel files or 90s style on premise software — this state-of-the-art SaaS approach is a huge leap forward. It gives project owners a real-time overview of costs and high degree of optimization without changing established processes in projects. The software is already live in operation in several projects by different developers and shows tangible gains from day one. It is clear that Alasco is up to something here and is increasing its offering from this entry point continuously.
(3) The opportunity
Ultimately, the proposition will reach far beyond with the goal to build the key software for construction projects. This is quite obviously what gets a VC like us very excited as we see the tangible opportunity to shake up a huge industry and provide a strong and sustainable solution to a large market which is open for — excuse the worn-out word — disruption. Alasco develops the digital tools for a whole industry to master the digital transformation and thus help all stakeholders in the industry. Besides the fact that Alasco has the chance to build a really big business, we are also driven by the fact that such change and the productivity gains acquired by it will result in very positive effects for an important industry addressing big problems in today’s societies.
(4) The team
Big opportunities need strong teams going after them. As HV invested in Stylight and I have supported Anselm, Benjamin and Sebastian for more than eight years on their former very successful venture at Stylight, I am deeply convinced that they are the team this market needs. With their entrepreneurial experience in building a company combined with their ability to identify the weaknesses of the construction industry, they know what it takes and are fully committed to making this a success.
HV has looked at hundreds of businesses in the broader PropTech space over the last years. But only with Alasco were we able to identify the key entry point into this massive opportunity. For us this is clearly “the horse to bet on” while attempting to create the key software for the construction industry.
Personally, I could not be more excited to be able to work with this team again and on the enormous opportunity ahead. In case you are equally excited and want to be part of the journey, check out Alasco’s job openings