Nymbl Take: Q1 2025 Market Insights

As anticipated in Nymbl’s 2024 Annual Report, Q1 2025 was a transitional quarter for the built environment as venture capital investors shifted focus to the most cutting-edge (bleeding-edge in some cases) technologies. Of the $3.55B in Q1’25 investments, 55% went toward funding next-generation robotics and AI-enabled technology, compared to less than 30% in all of 2024. 

Startup Funding in the Built Environment

($ in Billions)

Nymbl's Category Definitions

Building Tech – If a building were taken off the ground, everything within that structure, including the management, maintenance, operations, and even the materials it's made out of would fall into this category. Building tech encompasses solutions for developers, owners, operators, underwriters, and brokers of commercial, industrial, and residential buildings. (e.g., HVAC systems, electrical components, structural components, energy management, renovations, facility management, tenant management, VPP, commercial real estate, development, digital twin, carbon management, new building materials, etc.)

Infrastructure Tech – All technologies related to the maintenance, management, and optimization of horizontal assets (roads, bridges, utilities, power, water, etc.) as well as supply chain management and advanced manufacturing. (e.g., utility management, grid management, road & bridge inspection, water/waste management, clean energy generation, EV charging, smart city technologies, etc.).  

Construction Tech (ConTech) – All technologies involved in the construction of vertical and horizontal assets, and removed at the end of a project. (e.g., project management, field management, preconstruction solutions, workforce management, industrialized construction, insurtech, financing, architectural & engineering solutions, etc.) 

Many advanced manufactured technologies could be utilized in one, two, or all three of the above categories, but from an investor perspective, Nymbl classifies specific startup technologies into one of these three buckets based on its primary application.

Growth-stage investments remained strong in Q1 2025, with 47 post-Series A deals, second only to Q4 2024, which saw 53 Series B & later-stage deals close. At the same time, exits remained elusive in the wake of recent economic uncertainty and related public market volatility.

The first quarter of 2025 saw three prevailing themes within the built environment startup ecosystem:

1. Many long-awaited growth-stage deals finally closed, though meaningful exits remained elusive

   1. After a record-setting 53 Series B and later-stage deals in Q4 2024, Q1 sustained that momentum with 47 deals—representing 35% of all disclosed transactions (excluding grants and undefined rounds), up from 22% in Q1 2024

   2. 8 exits via M&A in Q1

      1. 7 had raised less than $15M

      2. At least 3 acquired businesses were distressed

      3. Workpack (fka Workorder), a 5-person startup, was acquired by Beck Tech after raising only $1.1M in a 2022 Pre-Seed

      4. CBRE's $800M acquisition of Industrious was the most notable
         

2. AI-enabled startups dominate VC investments

   1. In Q1'25, 46% of total investment dollars went toward an AI-enabled solution, a material boost from an average of 25% in 2024 and less than 20% in 2023
      

3. Construction Tech was the only built environment category that saw positive YoY and QoQ investment growth

   1. Investment in Construction Tech rose 46% year-over-year (YoY) and 17% quarter-over-quarter (QoQ)

   2. In contrast, investments into Building Tech and Infrastructure Tech saw significant reductions—down 58% and 29% YoY, and 65% and 14% QoQ, respectively

Growth Stage Momentum Continues

While the overall number of transactions in Q1’25 (140) declined 23% from Q1’24 (181), the number of growth-stage rounds (Series B and later) rose 47% YoY (as predicted in our 2024 Report), accounting for the highest share of total deal count since Q1 2022.

Deal Count & Growth Stage Allocation

Growth stage startups that received investments this past quarter waited more than 25 months on average since their last round of funding. Follow-on investors have been patient, waiting for the promises of early investments to materialize. As commercializing startups began to deliver on growth expectations, initial investors responded by doubling down and rewarding standout portfolio performers with late-stage support and growing rounds.

Months Before Early vs. Growth Stage Funding

Exit Activity

Q1 showed modest improvement in the IPO market, but the momentum was largely driven by cross-border deals, with overseas companies making up 44 of the 75 U.S. IPOs this past quarter. For startups in the built environment, however, M&A remains the primary exit route — and activity there continued to slow.

Eight startups exited via M&A in Q1’25, most notably among them was CBRE's $800M acquisition of Industrious, a 12-year-old coworking solution startup in which CBRE was already a significant investor. The remaining seven acquisitions were substantially smaller startups with a median age of less than 7 years and an average employee count of ~25.

There appeared to be a clear risk-off approach to those transactions: seven had raised $15M or less, and at least 3 appeared to be distressed acquisitions.

Six of the acquiring companies were other startups, pursuing opportunistic “fire sale” deals to enhance their product offerings – a rollup strategy that is becoming increasingly common among growth-centric founders and investors in this sector.

AI Dominates Built Environment Startup Funding

AI/ML Funding in the Built Environment

($ in Millions)

Nearly half (46%) of the $3.55B invested in Q1 went toward AI-enabled startups, an astounding metric when considering that the broader VC landscape only had a 30% allocation to AI. Whether backing startups born as AI/ML-proprietary solutions or those layering on new AI capabilities, built-world investors are clearly seeking exposure to this disruptive technology.

AI/ML Investments as a Percentage of Built Environment VC Funding

Please see our upcoming report on AI in the built environment for a more comprehensive analysis of trends in this emerging niche.

Construction Tech (ConTech)

ConTech/AEC startups recorded their highest quarterly VC inflows in three years, with $1.11B invested in Q1 2025—the most since Q1 2022.

ConTech Startup Funding

($ in Millions)

Corporations are playing an increasingly central role in shaping the ConTech ecosystem, participating in 72% of all Q1 deals. The rise of strategic investors in the ConTech startup ecosystem is critical to accelerating industry adoption and signals a decisive shift away from the long-standing "if it ain’t broke, don’t fix it" mindset that has historically hindered innovation in the sector.

Q1 ConTech Investment Breakdown

Project management startups captured the largest share of Q1 funding within the AEC startup landscape, with five post-Series A investment rounds pushing the average check size to more than $34M—44% above the mean ConTech deal size for the quarter (shown below). Growth funding rounds in project management were driven largely by category-specific construction solutions in clean energy generation, data centers, infrastructure, and subcontractor-focused solutions. International project management (PM) platforms also contributed to the outsized subsector investments, with startups from Germany, Belgium, the UAE, and the UK representing over $80M of PM funding.

Project management remains the most saturated startup focus area in ConTech, with 65 active startups competing for market share (as of the end of Q1 2025), not to mention the various tech giants who control this space today.

Project financing and insurance solutions within construction tech saw some of the most substantial deals of Q1, with 5 investments bringing in $213M for an average ticket size of $43.6M; nearly doubling the mean ConTech ticket size for the first three months of 2025. Construction insurance solutions like Jones and CompScience closed long-awaited Series B rounds, while Dunmor, a 3.5-year-old digital lender built to streamline cashflows for residential projects, brought in a 9-digit deal.

Meanwhile, preconstruction and design solutions gained momentum, attracting over $140M across 11 deals. This emerging ConTech subsector aims to improve a project’s probability of success before construction even begins—a critical phase that sets the tone for downstream execution. As data quality and dissemination improve, preconstruction platforms—especially those leveraging applied AI—will become more effective and increasingly indispensable to corporate leaders across the built environment.

Maturing ConTech Check-Sizes

Average check sizes for construction tech startups have soared over 2x since their 2023 trough to nearly $24M in Q1 2025. Over the same period, the average check sizes for building and infrastructure tech investments contracted by -49% and -36%, respectively.

Average Startup Investment Size in ConTech

($ in Millions)

Startups in the AEC sector have shown vast improvements in functionality and ease of implementation over the past 5 years, catalyzing adoption in the AEC sector. Well-positioned construction tech startups are finally breaching the $5M to $10M ARR/annual revenue hurdle discussed in detail in Nymbl’s 2024 Annual Report.

Percentage of ConTech Deals Series B & Later

Roughly one-third of Q1 Contech investments were Series B and beyond, compared to just 15% a year prior, marking the highest quarterly proportion post-Series A deals for this investment segment, according to Nymbl research.

Looking Toward Q2 2025

IPO and M&A activity will likely remain muted in the months ahead as investors and founders await the uncertainty surrounding the impact of global tariffs to crystallize.

Venture debt, distressed M&A, and highly selective investing into early and growth-stage startups are likely to be emerging themes of Q2.

From a bullish perspective, the built environment's underlying economic outlook holds strong, and its startup ecosystem remains young, with just 6% of active startups in later-stage (post-Series C). This offers built-world VCs and CVCs a strong pipeline of high-potential investment opportunities (more than 1,000 active startups seeking funding for Series B or earlier) in this transient period of economic uncertainty.