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Should Contractors Embrace VC-Backed Construction Tech?
26 Plays1 day ago
Join Jason and Carlos in Episode 93 of The Off Site podcast as they explore three topics shaping the construction industry:
🔗 The First End-to-End Tendering Platform: Dive into the merger between Australian platform E1 and UK-based C-Link, creating the industry's first connected solution from quote to contract. Discover why the gap between pre-contract estimating and post-award procurement has persisted for so long.
💰 The VC Money Rush: Analysis of the record-breaking $3-4 billion flowing into construction tech startups in early 2025. Explore whether this venture capital influx actually benefits contractors, including the hidden costs of VC-backed software and how investor expectations shape products.
🏆 League Table Shake-Up: Acciona tops the UK contractor league table for the first time with a £400 million waterworks win. What does this mean for competition and international contractors in the UK market?
Key Timestamps:
00:00 - Introduction & German Bunker News
05:08 - E1 and C-Link Merger Analysis
19:51 - Construction Tech VC Investment Discussion
30:50 - Acciona's League Table Win
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Transcript
The Cost of Software and Venture Capital
00:00:00
Speaker
So yeah, because you've got all of this money looking for a return, some large percentage, I think, of the the cost of the software that you pay as a contractor is the venture return expectation component.
00:00:14
Speaker
Whereas if the money had never gone in, those companies could probably charge like a quarter of the price and still be very, very, very healthy and profitable. It's the contractors paying back the VCs, basically. Exactly. Yeah.
00:00:28
Speaker
Yeah. Which is probably back to taxpayers money, paying the contractors to build jobs that are expensive. you've got to stop it at some point
00:00:39
Speaker
point.
Podcast Introduction and Episode Overview
00:00:41
Speaker
Welcome back to the Offsite Podcast, episode 93. I am Jason Lansini, joined as always by Carlos Cavallo, where we're unpacking what's happening across major projects, infrastructure and technology.
00:00:57
Speaker
This week, we are covering the recent news of Estimate 1 or E1 and C-Link merging to form the first end-to-end tendering to contract platform right in your wheelhouse, Carl. So i'm looking forward to diving into that.
Topics Preview: Mergers and Venture Capital in Construction
00:01:14
Speaker
Second, ah we're going to take a look at the continued rise in capital going from venture capital into context startups and specifically, is it good?
00:01:28
Speaker
nice very nice there's more detail to follow stick around this now um finally ah new name on the top of the uk contractor league table and we'll build suspense we won't mention who it is until the end uh this podcast called money is it good or bad yeah Generic topic, good or bad.
Germany's Bunker Project: Logistics and Implications
00:01:55
Speaker
So I did a little, I introduced the episode with a little bit of German, which is definitely on topic for in the news this week, Carlos, Germany's plan to, in a non suspicious way at all, build 1 million bunkers.
00:02:10
Speaker
So the first thing was, were you saying the number in Germany? Was it something else? so Yeah, yeah. said the number. No one should look that up or go back and check whether i did it correctly.
00:02:20
Speaker
But I felt like I did. Yeah, cool. Yeah. um Yeah. Germany, considering maybe is a bit too strong, spending $40 billion dollars on building 1 million bunkers.
00:02:34
Speaker
across the country for catastrophic events. And at the moment, they're worried that only 5% of the population can even fit in bunkers, which is way more than I thought would be active bunkers. Why do you need so many people to fit in bunkers?
00:02:49
Speaker
I well you assume it's the threat of nuclear war. That must be it. Cause yeah, like somewhere like I think it's like fin Finland, they can, they can fit like the whole population. I think it's Finland. I might be totally missing. They're forward thinking up there.
00:03:03
Speaker
Well, they're also porting Russia. So like, yeah The danger is real. Yeah. So, um yeah, I didn't think think I'd see that. um Let's hope they have one repeatable design.
Relating Data Center Case Studies to Bunker Projects
00:03:15
Speaker
i think I've got to on each one. The goal was to create one million of these shelter spaces, which may be calling them bunkers might be like overselling it. um They currently have 580. So that's a lot more.
00:03:29
Speaker
And i think the interesting takeaway when I read this was, ah do you know, you know, there's this like saying that like some people will just find the biggest pile of money and stand as close as possible to it.
00:03:41
Speaker
It does feel like in the news article that, you know, because Germany just announced his 500 billion euro investment in in infrastructure fund. This ah this president of the Federal Agency for Civil Protection and Disasterly is suddenly they're like, I need 10 billion euros in the next four years to build.
00:04:03
Speaker
So it's like suddenly all of the like, here's all the things I need money for ideas come out. Yeah. Also, 1 million bunkers, that the population's under 100 million, right?
00:04:14
Speaker
Must be. So it's like less than 10 people per bunker. Why don't they just- Do bigger bunkers. I think it might be to the fact that like they'd probably need to, I think I i remember watching a documentary.
00:04:28
Speaker
No, it's ah it's like how quickly it takes to get into the bunker because the bunker is useless if have to drive half an hour to it. Yeah, yeah, okay. This sounds like I'm like fully into like the bunker scene. um no I watched a documentary like to a year or two ago about Finland and I swear that they were doing, they do drills of like getting to them.
00:04:50
Speaker
um yeah I'm almost certain.
Merger of Estimate 1 and C-Link: Transforming Tendering
00:04:52
Speaker
How's our marketing team going to make a data center case study look relevant for a bunker project? That's what I'm wondering about. All right, let's dive into, I've brought the German and the Bumka knowledge because of my deep background and in Bumka tech.
00:05:08
Speaker
Jumping to a topic that is right into your wheelhouse. So Australian tendering platform E1, or I think recently rebranded, Estimate 1 recently rebranded to E1.
00:05:20
Speaker
and a UK-based subcontract procurement tool called C-Link have officially merged, forming a single solution that promises to connect commercial workflows from quote to contract,
00:05:33
Speaker
The deal has been announced recently, I think a week or two ago, as a merger of equals. um And it's this idea, and they're talking a lot about bringing this first connected across Estimator to QS platform.
00:05:47
Speaker
And it's like these two sides of the same coin. So for some background, Estimate One was founded in 2008. um I think in Australia, most of the Australian, they've definitely like one or other predominant solution in the Australian market.
00:06:05
Speaker
Seelink is a UK based company founded in 2015.
00:06:10
Speaker
and focuses on like post award workflows, I believe, um and used by UK main contractors and developers. And yeah, it's being presented as the UK's only truly connected procurement platform.
Pre-Contract vs Post-Contract Work: Challenges
00:06:24
Speaker
That's the extent of my knowledge of this whole work by Galos. And I'm glad you're here because I am interested in your thoughts on the problem being solved if it should be something together and did and then yeah, maybe why hasn't it been done before if it is important to solve.
00:06:42
Speaker
No one cares about QSs and estimators enough to to build themselves. No, um I guess ah if we start- Well, they do control the money. So you've got to think like, is it probably a good person to try and sell something to it? Yeah, the guy with the budget.
00:06:56
Speaker
Yeah. um No, they don't have the budget, but they they know how they know where budget is. They definitely don't have the budget. If we, yeah I guess to give us some context, if we talk through the two sides from a theory or practice point of view, and then i guess what the the the tools offer,
00:07:13
Speaker
So you've got pre-contract work that is typically done by a role type of the estimator. You're getting a pack of information from a client or an organization who's had a tender out to market.
00:07:27
Speaker
You're rapidly trying to produce a price for that job. A lot of that would involve actually going to members of your supply chain to say, can you price this?
00:07:37
Speaker
More of ah a quick and dirty, high-ish level, not to the nearest pounds type exercise, but you're trying to get a good feel for market rates. And you're hopefully on the bigger packages going to like three three vendors to try and get a bit of a well-rounded understanding about that price.
00:07:52
Speaker
You're trying to pull together every sort of risk and opportunity you can think of associated with the contract. You can build out a risk pot, but also try and work out where maybe you would make money in the future because you've got to cut the cost of the tender to win it, but then try and have an idea about where you're goingnna make it back.
00:08:08
Speaker
Yeah. um So there's lots of phone calls, emails running around trying to get this information in what could be like weeks, not months in some of these tender periods.
00:08:18
Speaker
Yeah. And on top of that, they might have some of the old school and systems or like they've got the old like Spons books, which have rates and general rates for like bits and pieces that get updated every few years.
00:08:31
Speaker
And then some companies will have maybe databases of information from the in tools like candy from other tenders. And they whip all of this up to win a tender, you win the job. Awesome. The first day of the job, there might be like the commercial lead of that job that has a bit of a handover discussion with the person that tended the job.
00:08:48
Speaker
But yeah most QSs who then do the post contract, let's actually procure these packages of works and bring subcontractors onto the project. ye They have a few line items and a bit of quantities with zero context, which gives them a budget to work with. And then they do everything again from first principles.
00:09:06
Speaker
And then
Integrating Pre-Contract and Post-Contract Systems
00:09:07
Speaker
they go to market. So the same as engineer team as well. Yeah, yeah yeah yeah it's the same it's the same sort of stuff. But you don't get packs of information from the subbies that provided information before to give you an idea of risk and opportunity. You don't really know what was priced for. You've just got a number to work with and then it's like all bets are off, start again.
00:09:25
Speaker
And then you're running a similar process, but imagine now you've got even more packages that they need even more prices for market based on the requirements of the the customer or the client. yeah And yeah, you're kind of starting blind, but then going through the process again.
00:09:41
Speaker
So E1 does the pre-con, the bid management at that sort of high level, which is information for estimators to produce tender information. C-Link does the let's find subcontractors, get prices, vt vet the subcontractors, communicate with them and get them all the to the point of contract and it can store documentation and things like that.
00:10:04
Speaker
Some projects, major schemes in the UK, people recognize tools like Compete4 that does that sort of tender management for major schemes. um But there's not really a decent tool out there.
00:10:15
Speaker
That's the two sides. So is the benefit that you can improve the handoff? So you're a contractor, you bid in the, in let's say an estimate one or a 10, you know, as so when you're bidding your job using that.
00:10:30
Speaker
then you win that job and is the benefit that you're handing over to the delivery team ah some level of knowledge? Is there any benefit like during the job or at the end of the job that goes back up or yeah, how how much literal benefit is there from this being in the same product versus two totally different workflows where that an integration would be useful?
00:10:56
Speaker
you know How much is it like, how how tightly connected are
Challenges of Merging Estimating and Procurement Platforms
00:10:59
Speaker
these things? Yeah, so unless there's ah some secretive world that I'm ah unaware of, there's information that goes back to head office where once a quarter and companies are worked out, they'll be like, what's your current rate for these core materials? And like, what are you getting from market and how much is costing? And they're doing an exercise to update a spreadsheet on like, what's the this sort of the landscape look like.
00:11:24
Speaker
With two connected systems, in theory, You can be looking at like actual profit and loss against like ah on a package basis against a tender to understand so how good we were at estimating what we missed. And you should be able to learn from that, especially with like in the future with the way that AI could take that information actually give you a decent answer without you then having to sort of spend hours and hours trying to digest.
00:11:49
Speaker
So I can see massive benefit there. I think if you're actually going to market on the post contract side, there's all sorts of things like how much work is a contractor actually doing your company because there's a big capacity issues and things like that, which are really hard to work out and all you get is a credit score from an online application.
00:12:08
Speaker
Contractors try to rank and league table their inter their supply chains. But um you could actually, um you could have like a ah commercial health score and then prioritize good performance in the company because you understand the behind.
00:12:23
Speaker
By knowing the companies you went to pre-contract tender, it might make sense to go back to the same three and go, here's some more information to make your price more accurate rather than going back to market and seeing who responds. So yeah.
00:12:36
Speaker
There's lots of ah points where you could improve, ah build upon the information you had rather than then start again from scratch. yeah And that's the big disconnect. So with that being said, you know, Estimate One was founded in 2008. Yeah. Okay.
00:12:51
Speaker
um Yeah. okay yeah So if this is such a problem, why hasn't it Why do you think it's not been solved and why is like why why don't why doesn't every one of these, but whether it's ah commercial management or tendering or procurement platforms, tackle both sides of this right away?
00:13:11
Speaker
So there's a there's a point which I think it was mentioned on a podcast that we listened to, but... um If you actually, as an estimator, if you really know what these projects are costing or losing, are you ever going to win a job?
00:13:25
Speaker
You kind of need to be a little bit blind to it so that you can put in a price and not be sweating at night. It's worth listening interested in the space. that There was a podcast that the teams did together from S1 and C-Link where they talked through the merger. I think Carlos and I both listened to it and and shared some notes in preparation.
00:13:43
Speaker
And yeah, like they do cover it. they They do raise that in there. Yeah, you're just never going to win a job if you go, like, imagine trying to win an HS2 tender and then you're basing on prices of HS2 contracts that have already been let and have already doubled in price. Like, it's a game ender.
00:13:57
Speaker
Yeah. so and it's like investing Some people say the same thing about investing in companies. Like, sometimes if you know too much about the company, you'd never invest. yeah yeah Yeah, exactly.
Entry Points for Construction Platforms: Estimating vs Procurement
00:14:07
Speaker
So there there probably is benefit from being a bit disconnected from it.
00:14:11
Speaker
I can imagine it's similar with like, why does the architect not consider every engineering detail at the point of design? Well, be a really boring design at the beginning or the the initial concept phase if you're you're too worried about the architecture.
00:14:25
Speaker
a detail of something specific at the end. yep um So I think there's benefit from not knowing. I think there's way more that can be done in the post-contract side and sharing information about actual contracts and how subcontractors are performing and and all of that good stuff. And what most teams still have is a Excel procurement tracker and then SharePoint folders for each contract.
00:14:49
Speaker
And that's that's where those contracts live. um Obviously, when you let a contract, you might put it in a document management system, but it's like a black hole of of stuff um commercially. If you think about this, like, okay, so we take let's take a couple of assumptions that this combined thing is very valuable for a customer in terms of like what what it can solve for a construction contractor.
00:15:11
Speaker
that raises a question of then we've got in this merger between C-Link and anyone might be oversimplifying but my my intuition is that estimate one is the much larger entity and much more established and so it would be like an estimate platform kind of buying an earlier procurement and contract management platform So you can kind of, in my head, I'm bucketing them as coming from the estimating side and attacking this joint problem and moving down into like then the procurement and contract management side.
00:15:44
Speaker
Then you've got a really big influx recently of companies building for procurement specifically. ah So and a number of them are Australian. So ProcurePro is in the UK and Australia.
00:15:59
Speaker
ah Felix is in Australia and a couple of other countries. um And they're starting from almost the other side. So I've won the contract and now I need to let all these contracts and invite tenders myself.
00:16:11
Speaker
So the the question was two questions that I have for you, which is one is, is one of them the better entry point to attack from? As in, is it better to own the contractor's internal procurement process and then bolt on, well, now you can roll that stuff up into bidding or is better to start from this is where you bid the job and then take it over to construction?
00:16:33
Speaker
And then based on the answer to that, my follow-up would probably be, You know, do you think this move from estimate one some like 15 years after founding is in response to competition and the the risk?
00:16:47
Speaker
So, yeah, go the first question first, like which way is the better spot to attack it from? I think if you can. If you can get into the market on the pre-contract side, the E1 side, you've got a very direct avenue to sell the other side because you're literally with the people that will be building the tender and pricing in the software and everything that comes with it. And the information is already in there.
00:17:10
Speaker
Yeah. but But it's like a billion pound contractor, i would bet has an estimating team of less than 10 people. So unless that's super expensive, you know you're not generating much revenue.
00:17:22
Speaker
The other side, I've been on jobs where it's almost one-to-one QS engineers. yeah so the Yeah. you're getting the volume.
Impact of Venture Capital on Construction Tech Startups
00:17:29
Speaker
So I would assume that it's E1 going, okay, we've we've cracked contractors.
00:17:34
Speaker
We can really grow when we leap across to the other side yeah because we're already in the door and that's the mass market. So yeah yeah, that would be my bet as to why they've made the decision.
00:17:45
Speaker
And so which one do you think is the stronger one to to to play from? You think it's from the estimating side and you just take those packages and now you go to transfer them over? Yeah, I think they they the left-hand side or the pre-contract side is definitely the...
00:18:01
Speaker
I think it is the bigger unlock, but it's the long game. If I was doing, if I was starting one of these myself, I'd go with the ceiling side, the post contract because it's like, it's way easier. There's more money, there's more people, there's more data, there's more everything.
00:18:13
Speaker
And estimators, I can imagine they're pretty hard to change the tools they use. Well, you've got to sell a bit of a darker you've got to sell top down to the company yeah because it's, yeah rather than the other side, you could sell bottom up into projects.
00:18:25
Speaker
Because they could run on different projects separately. Yeah, totally. Well, I think that it be an interesting conversation. so yeah, this the the headline snippet is Carlos thinks that like in and head-to-head between ProcurePro and E1 and E1 ceiling win.
00:18:46
Speaker
And we'll see what Al will say about that from Prokill Pro. Yeah, I think it'd be interesting. It's a very interesting take. So I could see how yeah you could roll it across. Maybe that works in smaller contractors, but yeah once you get to bigger projects are making their own decisions ah to a degree, is not yeah it's not an easy, just your whole go to market motion does switch. Yeah, that transfer of information because like the the estimator will have a chat with the commercial director, maybe the commercial manager at the beginning of the job.
00:19:15
Speaker
Not only is there not that information disseminated down, but they probably leave after a year or two years or three years. So And I also see like, just from an actual product perspective, like other than the transfer of some information backwards and forwards, they're two very so different products.
00:19:31
Speaker
Yeah, definitely. And so I'd imagine these two companies that emerge are going to be in that really like uncomfortable spot for ages where it's like log into this one and log into, you know, it's two think it'll be two products with an API. Two logins.
00:19:44
Speaker
Two logins. yeah Yeah. Yeah, yeah, definitely. All right. Interesting. Thanks for that. I learned a lot.
Risks of VC-Funded Growth: Pivots and Market Pressures
00:19:50
Speaker
um Righto, jumping on to our second topic.
00:19:56
Speaker
So i think we've covered this once or twice in the past, but construction tech startups have raised a ton of money recently and increasingly so. They've raised an estimated three to four billion globally in the first half of 2025, the fastest start to a year ever.
00:20:11
Speaker
um across themes like AI, obviously, ah green materials, field ops and supply chain tools. And I guess there's a question on the ground and I've heard a bunch of, or I've seen a bunch of people on social media talking about, well, it's really good that all this venture capital is coming into construction technology is gonna move the industry forward.
00:20:31
Speaker
um And I guess the the meta question being that that i was we were talking about and and I've been asking myself is like, if I'm a contractor, Is it actually good? you know what ah What actually happens in the marketplace when all of these companies are getting more and more money?
00:20:48
Speaker
So i guess if we were to dive into the the list of companies that have raised money in here, we saw you even just last week, 45 million raised by Build Dots, maybe maybe two weeks ago, 10 million plus raised by Build Vision, ah Document Crunch,
00:21:08
Speaker
a ton of them. Anything in there jump out in the list when we were reviewing it? We talked about weight cap raising nearly 30 million. Yeah, obviously the build dots, that's a huge range. I think it's a series D. like a series D, you've got serious traction and you're really, you're going for scale globally.
00:21:25
Speaker
Yeah, busy build, even building like $4 million. dollars It's still not a small amount of money. You've got decent traction at that point to be able to raise multiple millions. So Yeah, the list was, there was what, 15, 20 in the last year? Tools raising pretty serious cash. So the the the money is there from the contractor point of view.
00:21:46
Speaker
um i don't know, should we start with the ah the good or the bad? ah We'll start with the good. Let's be positive first. yeah Okay. If you're a venture, you've you've raised some cash.
00:21:58
Speaker
I think the the big and obvious one, like product maturity, getting that cash in the door, it's going allow you to shift features that have probably been sat on your roadmap and either an idea or a design state.
00:22:11
Speaker
You're probably going have a bigger design team. You're probably managing like one person trying to do everything. So you probably got and improved UI pretty quickly, like consistency of the tool.
00:22:22
Speaker
And you're probably going like quite hard on integrations. Can I take the counterargument to that exact point, not to interrupt you? Yeah. At the end of the day, the VC business model is one of what's called a power law. so the way that they construct a VC fund is that they're investing in some number of startups, depending on different stages in the construction of the fund.
00:22:43
Speaker
But ultimately, the expectation is that ah maybe a bottom 20, 25% fail. Some middle block ah of them maybe get some amount of money back, but not a great amount. one in three, they're betting on making it, something like that.
00:22:58
Speaker
Yeah, um no, no. ah Then the like top 20% they're hoping of of those investments are outsized returns. um And like really in there, maybe they try to get one that is a ah big success. success Yeah, it's like ah returns the whole fund um ah for them.
00:23:20
Speaker
And so that creates this ah dynamic where the VC's incentive is to invest in all of these companies and then try to get to that. They just need to get that one. They don't really care. The rest doesn't really matter. They need to find that one. And they must write them off as they go. Like, I don't care about that. Yeah, yeah, yeah,
00:23:34
Speaker
Yeah, and so their job is, to their whole incentive is to just drive immense growth. And so to your point about you'll get like better product, better UI, the risk is if the company that the money has gone into is a product mature enough or how to build product.
00:23:52
Speaker
um the The way that these companies raise the money is by, you know, I've got to a certain stage and what we're going to do in the next stage is release a second product, which is going to make us so much more bigger and i make a much much more revenue.
00:24:08
Speaker
And so there's this incentive for the companies themselves to pitch product expansion as part of their raise story. Yeah, to stack the growth. yeah To stack the growth. And then what happens is that they get the money and then it's like, holy crap, we have to ship a shitload of product now.
00:24:24
Speaker
And suddenly the bar to like what quality we're shipping can sometimes can drop it to just to go bulk features out the door. And not even the same direction. so you're going have like early stage companies, these customers might buy the sort of vision or where they're trying to go to and want to go on that journey
Venture Capital Expectations and Software Pricing
00:24:42
Speaker
with them.
00:24:42
Speaker
Yeah. That can can completely pivot into a different direction at that point, leaving them in the dark because they've got the cash and they're potentially being pushed in a different direction from the VC or are encouraged to go in a different direction because of that sort of revenue thing. So...
00:24:57
Speaker
Yeah, it's ah it's it could be a good or a bad thing. That probably depends on the maturity of the the company raising. Like ah a Series D raise, you can have a better view or vision. Yeah, certainly. that Yeah, yeah. then ah Than an for sure. yeah Being able to, back in the positive, showing that you're raising cash, it does create this buzz and this aura that you're you're making it, you're raising big money. so Yeah. Yeah.
00:25:22
Speaker
actually hiring and retaining talent is probably giving a bit of a boost. um And it kind of legitimizes you because if youre if if no one knows who you are and you've organically grown to 10 million revenue, you look smaller than someone that's publicly said, we're a million and we've just raised 10.
00:25:38
Speaker
yeah um So I think the legitimacy side and hiring gets boost. Does that help the contractor or does that confuse them there? Well, the contractor, yeah. Well, you need to attract the tagen the talent to be able to build out the tool.
00:25:54
Speaker
But that ties back to, is it the right direction or the right features and the right product? yeah So it's a bit of ah a difficult one. Yeah, incentives change. Well, if you to that portfolio construction thing, like right at the start when the investment goes in, all of those, you know, if you take a portfolio of 10 and you might hope for one, it's not even that. It's like 20 and the portfolio of one that's going to make it as the big outcome.
00:26:16
Speaker
They all look the same going in. And so the construction company potential customer is effectively trying to do it a venture capital's capital's job in working out which of these things should I purchase? Because yeah, the the the downside risk, I think, is back to that idea of product where you raise the money.
00:26:38
Speaker
Your only choice is to keep raising money. as Yeah, suddenly you have a, yeah, you've got a ah runway. And if you're not generating revenue, that's going to, it's flying at you at quite a pace. So that will change behaviors that can really sort of, yeah, take the company down a horrible direction if you're not growing at the rate that you promised. You know, if you you don't hit the rate that you're trying to touch the get and then you you get into this spot where, well, in order to justify another raise, because we're going to need it, because we're going to run out of money. If we don't, we start pitching more elaborate product expansion. yeah you know, you start, you start, you start,
00:27:16
Speaker
freaking out in your strategy. And then the staff are burnt out and confused and it all becomes a big sort of chaotic mess. But that we have to remember that the other option isn't always um don't raise VC cash because some products you just need a lot of cash.
00:27:32
Speaker
You can't start at this sort of slim or light version to start generating some revenue while you build out. So yeah. Yes, this is it like a legitimate ah process that founders should think about if they are on the simple side of a tool.
00:27:45
Speaker
But if you're on the like Motif or one of those tools, they can't they can't just grow organically. Yeah, yeah it's like you have to build. yeah it's a lot a lot You got to build a lot before you get started. Yeah.
00:27:57
Speaker
And then what's better? Like if you if you if you're a construction contractor and you see ah ah you know as an early stage company that you're aware of in a space that you think you might need potentially a solution for, raise 10 or so million.
00:28:11
Speaker
um And you know the goal is to spend that on salespeople and marketing a little bit of product. Is that better? I hadn't thought about that before, but yeah, if the entire pitch is like a sales and marketing drive, it feels like it's slightly better because the you're sort of, you're as the founder or the organization, you're double downing on the product. For the contractor, you know that the product's not going to significantly change.
00:28:36
Speaker
And for the VC, you must be bought into the idea that you've got product market fit. We just need to go for it now. So that feels better than the other type of phrase where you said, like, we're pitching three new products. and we need We're going to do all of these things and that will make money, I promise.
00:28:50
Speaker
yeah yeah The other side to this, which is interesting, which is ah all of this money that goes in to venture capital needs a return, or at least it expects a return. So it needs to be paid back some amount, 3x, 5x or something over the the life of the fund.
00:29:04
Speaker
And so ba because so much goes in, some expectation of a large chunk of them aren't going to make it. The one that does make it has to get to a valuation that pays back all of it times three, times four, times five or whatever it is, which means that the product that they're selling has to be priced such that it ah generates that.
00:29:23
Speaker
I think there's an underlying argument there that therefore some amount of the price of the software that you pay is paying the return of the investors across the entire portfolio of bets that they've made into that price.
Taxpayer Money and VC-Backed Software
00:29:37
Speaker
Just don't tell them that's a lot of pressure. You're the guys. So yeah, because you've got all of this money and looking for a return, some large percentage, I think, of the the cost of the software that you pay as a contractor is the venture return expectation component.
00:29:54
Speaker
Whereas if the money had never gone in, those companies could probably charge like a quarter of the price and still be very, very, very healthy and profitable. um yeah because they don't have the same the same outcome expectation.
00:30:09
Speaker
It's the contractors paying back the VCs basically. Exactly, yeah. yeah yeah yeah And not only for the software that they buy, but for the whole portfolio of bets because they have to pay off the they have that one that wins the or the white the the group that do win have to make up for the the losses on the rest of the portfolio.
00:30:30
Speaker
So yeah, when you're when you're buying venture funded software, that is the market leader. The price of that software is paying the venture firm back for the losses of everything else in there.
00:30:42
Speaker
And you should be paying a lot less. Which is probably back to taxpayers' money, paying the contractors to build jobs that are too expensive. You've got to stop it at some point.
UK Contractor League Table: Acciona's New Leadership
00:30:50
Speaker
All right, we're going to run out of time. I think there's a lot more we could go down there. But let's jump quickly to topic number three before we wrap. We've got two and a half minutes left.
00:31:00
Speaker
Contractor league tables for May 2025 for the first time ever that we could find a firm has ah topped the league table that has never topped it before after winning a 400 million pound Waterworks upgrade.
00:31:16
Speaker
ah Do you want to guess what the contractor is? I reckon it's Asiona. Yes, the Spanish construction giant at the owner is no stranger to infrastructure and um major projects and is ah a huge player in other parts of the world, but historically hasn't done a lot of direct work in the UK.
00:31:36
Speaker
And is, I think, would you reckon a sign of more competition in the market? Yeah, i um because ah there's only a couple of major projects they've really had in in the past. And i think they're they're joint ventures.
00:31:50
Speaker
ah within energy, ah both within energy, actually. So this is like a new division going at it on their own on a major 400 million pound scheme. So I would definitely expect them to be thinking strategically around the UK.
00:32:03
Speaker
And yeah, I mean, there's ah there's a lot of major... international contractors here. I think some of them, the name becomes so familiar that people don't think of them as international contractors, like Skanska, like Bam, like others. yeahp But um they are winning the jobs. and They're good employers and I think they'll do well. So yeah, fair play to Asiona.
00:32:20
Speaker
That is a ah massive win. um So would it be expected to see more, um especially as they are quite big in energy and that seems to be where all the cash is going at the moment. Certainly. but Yeah. so congratulations to Asiona. And that takes us right to the end of the episode. Carlos, thank you very much, mate. Do you want to read us out?
00:32:38
Speaker
Yeah. Thank you very much, everyone, for tuning into today's show. If you did enjoy the episode, please do think about liking the video or following us on your chosen podcast platform. We really appreciate your support and we'll catch you all next week.
00:32:51
Speaker
Bye bye.