Darren Bechtel (yes, of those Bechtels) has raised $97.5 million for his firm, Brick & Mortar Ventures

Published August 13, 2019

Brick & Mortar Ventures, a young, San Francisco-based venture firm that’s focused on startups innovating in or around architecture, engineering, construction and facilities management, has closed with $97.2 million in capital commitments.

The fund is one in a sea of debut funds that have swung open their doors in recent years, though it’s also interesting for numerous reasons, beginning with its founder, Darren Bechtel, who knows a thing or two about the building industry. He’s a scion of the family that built the 120-year-old, privately held company Bechtel into one of the largest construction and engineering firms in the world. In fact, his brother, Brendan, who was named CEO in 2016, represents the fifth generation of Bechtels to lead the company. (Their sister, Katherine, is a project controls manager with the powerhouse outfit.)

Brick & Mortar’s investors are just as notable. They aren’t the typical pension funds and university endowments that many VCs try hard to lock down. Instead, they comprise a long list of companies that are part of the “construction value chain” and so have an interest in the latest and greatest developments in their respective industries. Among the firm’s backers, for example, is the special materials maker Ardex; the software giant Autodesk; the building materials company CEMEX; Ferguson Ventures, which is the venture arm of a huge U.S distributor of plumbing supplies; FMI, a management consulting company to the engineering and construction industry; Obayashi, a major Japanese construction company; Sidewalk Labs, which is Alphabet’s urban innovation organization; and United Rentals, one of the world’s largest equipment rental companies.

Brick & Mortar isn’t the first venture firm to focus on the so-called built world. Other firms that focus largely, if not exclusively, around the same themes include Fifth Wall Ventures, Navitas Capital, Corigin Ventures, Camber Creek, MetaProp, Starwood Capital and Tamarisc Ventures.

In fact, Darren Bechtel has ties to and is an individual investor in Fifth Wall, an LA-based firm that stormed onto the scene in 2017 with an equally impressive, and very different, roster of limited partners in the real estate industry, from which it has already amassed more than $700 million in capital commitments across two funds.

As Bechtel told us on a call late last week, he was going to go into business with Fifth Wall’s founders initially, but they wanted to raise a lot of money, and Bechtel was thinking more conservatively — for a reason. “I’d done five deals on AngelList with [Fifth Wall co-founder] Brendan [Wallace] and we’d started putting together a pitch deck, and as we were thinking through ideal fund structure and size, Brendan said $500 million and I said $50 million,” says Bechtel.

Wallace was thinking big, says Bechtel, because “hospitality already had some massive players — Airbnb, WeWork. It was a far more mature landscape, and Brendan thought that if we were going to own a category, we needed the capital to secure a leadership position in the right deals.”

Bechtel thinks Wallace was right, too. He says he just came to realize that construction tech — which is what really interested him — was in its own league, and it was in its infancy. Though the construction software company PlanGrid took off like gangbusters — Bechtel wrote the largest check during the company’s seed round — it wasn’t so long ago that “there were great, billion-dollar ideas being formed but the rounds were small and the valuations were small,” says Bechtel. Because the “investment community didn’t understand what it was looking at, I had concerns about our ability to generate returns if we had too large a fund.”

In the end, the friends and former Stanford MBA classmates decided to split their respective focus on real estate and hospitality (Fifth Wall) and the actual construction of buildings (Brick & Mortar), and things seem to have gone well since. As Fifth Wall has gained traction, so too has Brick & Mortar, which is now a couple of years in the making. Indeed, though Bechtel is announcing the close of Brick & Mortar’s first fund today, he already works with two principals and two associates, and they’ve collectively sourced and funded 16 startups to date with capital they’ve been raising from investors along the way.

One of those checks went to Fieldwire, a maker of field management software for construction teams. They’ve also backed Serious Labs, which trains workers how to use heavy equipment and tools via virtual reality software, and Curbio, a real estate technology startup that orchestrates turnkey renovations for home sellers, then gets paid back once the home is sold.

Brick & Mortar even has an exit already, having helped fund the construction software platform BuildingConnected, which sold last December to Autodesk. (Bechtel’s earlier investment in PlanGrid, which also sold to Autodesk last year, was a personal investment, one of roughly 40 he made before setting out to create a traditional venture firm.)

As for whether Brick & Mortar ever hunts for companies that Bechtel — the firm founded by Darren’s great-great-grandfather — might like to acquire or otherwise partner with, Darren is quick to note that the firm is not an investor in his venture fund or any or its portfolio companies, and he doesn’t have his finger on the pulse of what’s happening there.

“I don’t work at Bechtel or pretend to know what their intentions are, though my brother is CEO, so you could say I know a guy there.”

More, he notes, he doesn’t think it would make sense to fund a company that “a user would want to acquire. If one user buys [a startup’s tools] because they want exclusivity, they’re limiting the exit value of that company.” To underscore his point, he notes that “Bechtel does around $30 billion a year, but the construction market is an $11 trillion market.” In the end, he says, it’s “better to have a preferred relationship. Maybe you get the next year’s model released early; maybe you get custom colors.” But if you’ve developed a winning product, you want to make it accessible to everyone. “You benefit the most by having a technology adopted by the whole industry.”

Above, the Brick & Mortar Ventures team. From left to right: Austin Yount, senior associate; Alice Leung, associate; Curtis Rodgers, principal; Darren Bechtel, general partner; and Kaustubh Pandya, principal.