Sansari Plc, one of the largest real estate developers in Thailand, has announced that its investment arm (called Siri Ventures) will deploy 1.5 billion Thai baht (roughly $47 million USD) over the next three years in real estate and construction industry technology startups. The company, which has traded publicly on the Stock Exchange of Thailand since 1996, will hold between 10 and 25 percent equity in each of these portfolio companies.
As part of this effort, Sansari has also joined the Plug and Play Tech Center accelerator network in Silicon Valley, which runs two programs in each industry and location (for a total of 50 accelerator programs annually). It has 220 corporate partners and 200 venture capitalists participating in its network and was an early investor in Google, PayPal, and DropBox.
The company’s venture arm was founded last year and, since then, has invested in four startups: a smart indoor farm called Farmshelf; home automation software developer Appysphere, a Thai AI voice developer called Onionshack, and the delivery robot firm Techmatics, whose core product Sansari has deployed at several of its projects.
This current round of funding is focused on the company’s core real estate business – from property, living, and health and wellness to construction technology, where Sansari hopes to find BIM applications for augmented and virtual reality that can help it streamline construction delivery with lower cost and tighter schedules. Already it is in discussions with nearly a dozen Thai and foreign startups that are focused on renewable energy and smart home solutions.
Analysis from AEC Labs
We think Sansari’s initiative is noteworthy here at AEC Labs for a few reasons.
First, and as we’ve been predicting here in January, it suggests that AEC industry players will not be hesitant to invest their own capital in construction and prop tech startups, particularly as doggedly low interest rates make it difficult to deploy capital that can enjoy meaningful yields.
Second, we think it’s illustrative of a broader trend where we are consistently identifying interesting construction and proptech startups from outside of the United States – from Canada and Sweden to Ireland and elsewhere – that are attracting attention from venture capital and real estate and construction industry stakeholders.
There could be a few reasons for this. In the US, the overwhelming amount of venture capital has been invested internet tech startups ($6.4B in Q4 2017, compared to $594M in the industrial sector). So perhaps it’s easier for civil engineering and construction tech startups to get noticed in foreign jurisdictions where there is less venture capital flowing.
There could also be cultural factors at play.
Civil engineering in the United States, unfortunately, can be viewed as a commodity business, where state and local governments are a large portion of the client base and generally indifferent towards changing the status quo. This is compounded because state and municipal debt in the U.S. is tax-deductible (whereas it isn’t in many foreign countries.) Project finance and private sector funding originated in Europe and Australia precisely because municipal bond markets in those countries don’t exist. So maybe those undercurrents are driving innovation through a foreign private sector that has been a more active participant in the civil engineering space than it has been here in the US.
Either way, it’s exciting that such a large real estate developer is slated to invest such a large sum in construction and prop tech over the next few years. and we’re anxious to see what Sansari’s portfolio ends up looking like as it gets started with Plug and Play and some of the startups that the developer already