Archinect - News

Can modular housing startups be saved at a critical time for the industry?

2024-01-18T14:08:00-05:00

The notion that factory-built modular homes can serve as the salvation to America's vexing housing crisis has increasingly come under scrutiny, a report summarized recently in Business Insider.

A crippling lack of widespread success for modular housing startups can be attributed to state and federal manufacturing regulatory barriers, a lack of builders’ experience, investors’ overconfidence, local building codes, persistent social stigmas about prefabricated homes, and an overall lack of demand. The inflexibility of the prefabrication process for single-family designs is another factor hindering many businesses as well, according to the article.

Katerra and, more recently, Veev are perhaps the best-known examples. The once $1 billion Bay Area ‘unicorn’ shuttered its U.S. operation in November after constructing 170 units total in 15 years. Veev's failure can be boiled down to a fla...

Ambitious construction startup, Katerra, finally folds after a challenging run

2021-06-02T14:12:00-04:00

An executive told employees on a video call that the firm didn’t have enough money to pay severance packages or unused paid time off, a person who attended the meeting said. The executive said the effects of Covid-19, as well as rising costs of labor and construction materials, contributed to its latest cash crunch.

Katerra, a closely watched startup founded 6 years ago, had a vision to reinvent the massive construction industry. After a few years of challenges and bailouts from investors, they've announced this week that they will shut down.

The CEO of SoftBank, Masayoshi Son, indicated that Katerra and WeWork were among the investment firm's biggest failures to date. Greensill, one of Katerra's lenders and another major investment of SoftBank's, also recently announced bankruptcy, making it even more difficult to save the company.

Katerra will be cutting thousands of jobs, possibly without severance or owed time-off pay, and is expected to abandon construction jobs previously contracted to Katerra.

To follow the rise and fall of Katerra, check out the related articles below...

Construction start-up Katerra receives major bailout from SoftBank

2021-01-05T20:50:00-05:00

Since our initial coverage of the Silicon Valley-based construction start-up, Katerra has experienced several ups and downs over the past few years. While the company has grown significantly since it was founded in 2015, financial issues continued to rise.

Katerra's CEO Pall Kibsgaard shared with the Wall Street Journal, "I think we underestimated the complexity of executing self-perform projects at a large scale, including manufacturing and material sourcing and managing our own labor."

In 2019 Katerra faced flopped overseas expansions as well as layoffs and cutbacks for the company. However, their relationship with Japanese investment firm SoftBank continues as the company invests $200 million to bail out the start-up as they enter 2021. SoftBank is one of the earliest and largest investors in troubled co-working company WeWork.

Katerra's goal to revolutionize the construction industry, specifically with mass timber and modular construction, continues to make headway. Kibsgaard...

Katerra stumbles as it expands overseas

2019-12-26T16:00:00-05:00

Katerra has failed to complete roughly a dozen projects and could only name one that was delivered on time. All the while, logistical and technology-based issues have chipped away at the company’s image as a revolutionary tech startup. Some clients have ended their relationship with the firm. Other clients, however, are tied to Katerra’s executives, and have drummed up business for the company—a similar arrangement used by WeWork executives, which became a concern for some investors

The Real Deal takes an investigative look at some of the recent business dealings and project announcements from Katerra. The vertically integrated construction and modular building components start-up is facing renewed media and financial scrutiny following the recently announced closure of its first fabrication plant in Phoenix, Arizona. Katerra recently opened a new 270,000-square-foot CLT factory in Spokane, Washington.

The company also recently expanded its project offerings in Saudi Arabia and India, the former of which is the biggest backer of Japanese technology start-up investor Softbank’s Vision Fund, a financial vehicle that backed WeWork, Compass, and Uber, three highly valued ventures that all stumbled in 2019.

Modular construction startup Katerra cuts 200 jobs to embrace automation

2019-12-13T17:08:00-05:00

Katerra Inc., a modular construction startup, got an $865 million cash infusion from investors led by SoftBank Group Corp. last year. Now, the company is shutting down a factory in Phoenix and cutting 200 jobs. The move will shift Katerra’s manufacturing away from Phoenix and into its highly automated and lower-cost factory in Tracy, California.

The company's mission is to "shake up the construction industry with a combination of efficient factories, prefab parts and modular construction units," Bloomberg reports. The Phoenix factory will remain open thorugh the end of the year and affected employees will receive a 90-day severance package.

Katerra acquires two general contractors to bolster nationwide presence

2019-09-13T16:50:00-04:00

US prefab specialist Katerra has added two contractors to its stable of companies: UEB Builders and Fortune-Johnson General Contractors. The acquisitions allow the Silicon Valley company to expand its coverage of the US market. UEB Builders is a general contractor in Arizona that constructs commercial and residential projects. Georgia-based Fortune-Johnson specialises in multi-family residential projects. Both companies will adopt the Katerra brand.

According to Bim+, the acquisition will add 320 employees to Katerra's payroll, pushing the company's workforce to 8,500 individuals. In January 2019, the end-to-end building services provider also received an infusion of investment from Japan's SoftBank that raised Katerra's valuation to over $4 billion.

Funding flows to construction technology start-ups

2019-07-24T09:36:00-04:00

Funding in US-based construction tech startups totals just $196.5 million across 44 deals halfway through 2019. Still, $192.6 million across 44 deals is still significantly lower than the $1.274 billion raised by US-based construction startups in the first half of 2018.

The bustling world of construction technology start-ups is off to a slow start in 2019, as mid-year funding statistics point to a marked drop in investment for these insurgent companies over 2018's blockbuster year, Crunchbase reports.

Whether or not 2018's record investment, including Katerra's $865 million haul, was a one-time fluke remains to be seen. Either way, that's not stopping funders from supporting companies like Rhumbix, a San Francisco-based field data-capturing platform that helps builders go paperless on the job site, which recently received a $14.3 million in new investment.

Trevor Zimmerman, managing partner at investment firm Blackthorn Ventures, told Crunchbase, “Today, foreman and laborers have supercomputers in the form of smartphones in their pockets,” adding, “That’s enabling companies like Rhumbix to bring efficiency gains to construction that other sectors, like manufacturing, were able to access over a decade ago with desktop computers.”

New York City-base...

California-based construction start-up Katerra valued at more than $4bn with help from Japan's SoftBank

2019-01-16T14:38:00-05:00

In just four years, the Silicon Valley start-up Katerra has grown from a sizable construction firm to one of the industry's biggest disrupters. Now, with support from one of the tech industry's biggest investors, the California-based construction company has announced plans for another investment round that will have it valued at more than $4 billion.

SoftBank, the billion dollar venture capital firm helping to bankroll companies such as Uber, WeWork and the indoor farming start-up Plenty, is expected to lead the $700 million round of financing for Katerra. This comes less than a year after the Japanese holdings company invested a prior $865 million into the company.

In Katerra, SoftBank is backing a revolutionary approach that promises to redefine the $12 trillion construction industry. The company's aim is to make the building construction process cheaper and more efficient and while Katerra is not unique in this quest, it is remarkable for its end-to-end design-build process whi...

Startup Katerra wants to revolutionize the construction industry

2018-06-27T15:18:00-04:00

A Menlo Park company called Katerra announced that it had acquired Michael Green Architecture, a 25-person architecture firm in Vancouver, British Columbia. On June 12, the company revealed that it had bought another, larger architecture firm, Atlanta-based Lord Aeck Sargent. This comes five months after Katerra raised $865 million in venture capital from funders led by SoftBank’s Vision Fund, which has also invested heavily in the co-working startup WeWork.

Startup Katerra looks to revolutionize the construction industry through streamlining the entire process with their design-build model. The company has acquired Michael Green Architecture, known for designing tall wood buildings, and Lord Aeck Sargent.

With these two firms obtained, Katerra will now consolidate by designing and building its products in house. Michael Green Architecture's influence can be seen as Katerra is developing a catalog of mass timber products for residential and commercial building projects. Uniquely Katerra has also created a system to guarantee price early on, a rarity in the industry.