The COVID-19 pandemic is challenging sectors that have, until now, experienced relatively low levels of technological transformation. One sector that is no exception to this trend is construction.
“We’ve seen a sea change in people’s mindset around the adoption of technology.”
According to a 2019 study, the construction industry globally has lagged well behind other industries in its adoption of digital tools. While that may be the case, a survey from Procore Technologies found that in Canada, the industry is digitizing at an increasing rate over the past couple of years.
The pandemic is further driving the acceleration of tech adoption in the construction sector, with one report finding it is set to transform a historically highly complex industry to one in which more stakeholders can benefit.
Toronto-based construction tech startup Tread is one of those stakeholders currently looking to make the most of this disruption. The startup offers a digital platform aimed to streamline and improve the business of moving construction materials.
Noah Dolgoy, founder and CEO of Tread, characterized the industry as heavily reliant on paper and face-to-face communication.
“The tools that have been used historically have not caught up with the demands of an increasingly complex set of construction challenges,” he told BetaKit.
Dolgoy claimed that amid COVID-19, Tread has seen “an almost overnight shift” in the construction industry’s willingness to adopt digital tools, which he said “totally validated” Tread’s business model. Since the onset of the pandemic, Dolgoy said Tread quadrupled the number of its vehicles on its platform and doubled the number of regions the platform is deployed in.
Tread also added more clients in the six week period ending November 3, than the startup did in the previous year alone, the CEO claimed. Utilization rates have also seen a notable uptick, increasing six-fold from last year.
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“I believe that what COVID has done to construction, and particularly construction’s appetite and desire to adopt technology, has been generational,” Dolgoy told BetaKit. “We’ve seen a sea change in people’s mindset around the adoption of technology and the need to adapt processes for an increasingly uncertain reality.”
The global construction software market is expected to reach $2.71 billion by 2023. In Canada, startups like Bridgit, which offers construction resource management and workforce planning software, have played a role in digitizing and simplifying processes in the construction industry.
Dolgoy told BetaKit the COVID-19 pandemic has dramatically accelerated this shift, as construction industry leaders are also charting a path toward keeping their employees, contractors, and end-users safe.
“I believe that what COVID has done to construction, and particularly construction’s appetite and desire to adopt technology, has been generational.”
Tread’s management software is targeted toward excavation, subcontractors, and truck dispatch activities, for large-scale infrastructure projects, such as highway construction. The software is designed to replace paper-based processes to help keep track of essential fleet assets.
Dolgoy explained that the pandemic and new health and safety guidelines forced teams to go paperless, and dramatically limited face-to-face communication.
“What we’ve then seen subsequently is clients who started using digital tools like ours saw their productivity increase significantly, and had these headshake moments of ‘Why weren’t we doing this before?’” he said.
Beyond growth, the pandemic also allowed Tread to optimize its own operations. Prior to the pandemic, Tread’s process for onboarding new clients involved travelling to different offices and training them in-person.
The shift to remote work forced the startup to be more meticulous in how it communicates and allowed the company to onboard operators totally remotely, which reduced the cost of onboarding while speeding up the process.
“It also has allowed us to run iterative tests much more quickly in terms of onboarding tools, sales, exercises, things like that,” Dolgoy added. “So we can now test our outreach methodology much faster than we could previously.”
Dolgoy first recognized the challenges of managing heavy equipment and subcontractors when he started a residential construction business. He noticed that millions of dollars of equipment were being rented and managed with calls, texts, and paper tickets, prompting him to turn to tech in 2016 and start Tread. Tread is an alumnus of Creative Destruction Lab and Techstars. Since 2016, the startup has launched in the United States and closed two rounds of institutional financing.
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Tread’s latest financing was a $12 million USD Series A round, the majority of which closed in November 2019. The round also included debt financing from Silicon Valley Bank, which closed in October. Tread’s Series A round was led by Crosslink Capital, with participation from Real Ventures, Radical Ventures, Ripple Ventures, and New York-based FJ Labs.
Dolgoy said there is potential for all facets of the construction sector, be it residential or infrastructure, to get more efficient as they are forced to adopt greater tools because of the pandemic.
“There is a shift towards the utilization of digital tools to increase productivity in an increasingly uncertain world to reduce risk in an uncertain world and also to reduce the necessity of face-to-face contact,” he said.
Dolgoy said with its platform, Tread has taken a transaction and digitized it, and now the focus will be on optimizing that digitization and looking at additional stakeholder relationships. The startup says this will include increasing the diversity of tools, payments, reporting, invoicing, insurance, or any activity that delivers administrative value to clients.
“Ninety-five percent of the world we live in is built,” Dolgoy added. “If we can find ways to make that process more efficient, more productive, and safer, we’re doing not only industry a service, but we’re also doing society a service.”
Image source Tread.