Softbank-backed Katerra wants to disrupt the construction industry using Silicon Valley’s electronics industry approach

Softbank-backed Katerra wants to disrupt the construction industry using Silicon Valley’s electronics industry approach

Friday February 09, 2018,

4 min Read

Katerra, which calls itself a tech company instead of a construction company, is changing the way the construction industry works. Katerra recently announced that it has raised $865 million Series-D funding round led by the SoftBank Vision Fund. 

At a glance

Startup: Katerra

Founders: Michael Marks, Jim Davidson, and Fritz H. Wolff

Year it was founded: 2015

Where it is based: Menlo Park, California

The problem it solves: Tech-based construction company

Sector: Construction

Funding raised: $1.1 billion

 The construction industry is ripe for disruption. The last craft industry, construction has yet to enter the industrial or technology age. People are building homes today essentially the same way they did in the mid-1800s. Economies of scale just don’t exist: most sites/projects are designed, planned, quoted, bought out, and built as one-off projects. Yet they all have many standardised materials, labour skills, design components, processes in common. 

Founded in Menlo Park, California, Katerra was started by Michael Marks, Jim Davidson, and Fritz H. Wolff. Combined, they have decades of experience in the technology, manufacturing, real estate and private equity industries. Using the disciplines, processes, and hindsight of the extraordinary gains of the last several decades in electronics manufacturing, Katerra is putting modern technology to work at all levels of the construction industry.

Founded in 2015, Katerra has accumulated more than $1.3 billion in bookings for new construction, spanning the multi-family, student and senior housing, and hospitality sectors. Katerra has built a global team of more than 1,300 people, attracting senior leadership and talent from groundbreaking technology brands such as Apple, Google, HP, Nokia, Sandisk, and Flextronics. Katerra has opened a fully operational manufacturing facility in Phoenix, Arizona with a roadmap in place for multiple additional domestic factories, including breaking ground on a mass timbre factory in Spokane, Washington. Katerra ranks as one of the top 25 multifamily general contractors in the US.

“The construction industry is ripe for digital disruption,” said Michael Marks, Chairman of Katerra. “Katerra leverages its own software platform to remove time and costs from building development and construction.” Michael is a founding partner of Riverwood Capital, a Menlo Park-based private equity firm. Prior to establishing Riverwood, he was a partner and senior advisor at Kohlberg Kravis Roberts & Co. in 2006 and 2007. Prior to KKR, Michael spent several years as CEO and then chairman of Flextronics International Ltd., building it into one of the largest technology companies in the world. 

Michael Marks

Katerra offers supply sourcing, design and engineering, manufacturing, and construction for a growing number of building markets–including residential market rate, senior, essential housing, educational, industrial, and retail developments. 

Katerra uses a vertically integrated team to provide end-to-end building services within a single partner, including architecture, interior design, engineering, material supply, manufacturing, and construction. Katerra’s proprietary technology drives this integration by connecting Building Information Modeling (BIM) tools and computational design directly to its global supply chain infrastructure for ease of material ordering, manufacturing, tracking, and delivery. Using integration between factories and construction jobsites, Katerra offers greater precision, higher productivity, and quality control. With materials and products arriving at construction sites just in time and ready to install, a Katerra job site more closely mirrors a process of precision-sequenced product assembly than traditional construction.

Katerra follows a unique design approach combining product standardisation with customisation, providing the efficiency of manufacturing without sacrificing design freedom. Using a global supply chain of curated, high-quality products, Katerra eliminates middlemen and passes on the savings directly to clients. 

Katerra recently announced that it has raised $865 million Series-D funding round led by the SoftBank Vision Fund. New investors in the round include: Canada Pension Plan Investment Board (CPPIB), a private investment fund managed by Soros Fund Management LLC, Tavistock Group, Navitas Capital, DivcoWest, and others. Existing investors include Foxconn, Greenoaks Capital, DFJ Growth, Khosla Ventures, and Louis M. Bacon, the founder of Moore Capital Management, LP. 

“Katerra is leveraging the latest technologies to radically transform the way people build. Drawing on his experience leading Flextronics, Michael’s unique vision and talented team are taking the great lessons of electronic manufacturing and applying them to an industry that is in dire need of change. We are excited to support Katerra as they expand across markets and geographies and unleash a new wave of productivity. The $12 trillion construction industry is extremely fragmented with tens of thousands of companies using minimal levels of technology. While labour-productivity growth has skyrocketed in the overall global economy, the construction industry has averaged only one-percent annual productivity growth over the past two decades,” said Jeffrey Housenbold, Managing Partner for SoftBank Investment Advisers. 

Katerra is building their R&D capabilities, and rolling out additional factories to meet customer demand. With offices in Bengaluru and Pune, Katerra is currently recruiting for positions in those offices.