Vivin Hegde: How He and Zacua Ventures Are Finding Sustainable Construction Unicorns

Vivin and his team anticipate great returns from investing in a slim-margin industry

I love a good niche.

Some people are afraid to limit themselves by claiming a focus area. Others don’t feel confident enough to claim they’re a specialist.

I find that niching down creates better opportunities and more direction. And that applies to content writing as well as venture capital.

That’s one of the reasons I’m so drawn to Vivin Hegde and Zacua Ventures, which focuses on sustainable construction. “We invest in anything to do with the design, construction, and operation of buildings. So some of the largest problems that the world faces today—sustainability, affordable housing, infrastructure, resiliency—are all created by the built environment, or the lack of innovation in the space. And that is what we are trying to solve.”

According to Vivin, there’s so much under-served opportunity in the industry—and his LPs know it, too. Most emerging fund managers don’t see any corporate investment until at least Fund II, and even then, it takes years of relationship- and track-building to achieve. But nearly all the investors in Zacua Ventures’ Fund I are corporates because they recognize the team’s competitive edge and want exposure to their deals.

Experience Is the Unfair Advantage

Vivin spent nearly a decade at Hilti Group learning the needs of the construction and infrastructure industries. He worked on job sites and became intimately familiar with the inefficiencies of construction.

After spending the later years with the Hilti Ventures team, Vivin embarked on his own journey as an investor. He and his partners, who come from cement supplier CEMEX, launched Zacua Ventures to invest in early stage construction startups that address productivity, urbanization, and sustainability.

“For someone who's not from the industry, understanding the workflow is not automatic,” says Vivin. “In FinTech, you spend money every day, you go to banks. Everybody thinks that they know something, so everybody wants to get into it. You're not on a construction site every day, you're not on an infrastructure project every day, so people won't exactly know how it works. Monetization is not straightforward.”

And without a clear path to monetization and profitability, any startups can seem like a money pit. But with their extensive knowledge of the construction space, Vivin and the Zacua Ventures team can easily overcome the common barriers that unfamiliar investors face.

The first is fragmentation. Regulations vary not just from country to country, but from region to region, even down to the district level in a city. As a result, it’s extremely challenging for startups to create a solution that works for enough people in the industry and can also be profitable.

“Because of the fragmentation, the go-to-market process is quite complicated,” Vivin explains. “There are millions of contractors across the world, so making it a frictionless process—in terms of approaching them—is very important. And to make it frictionless, you need to understand the process really, really well. That's why when we look at founders, it's very important for us that they understand the problem intimately.”

Finding Big Returns in a Slim-Margin Industry

Another challenge investors face that Vivin recognizes is the cost benefit of making any improvements or changes in the construction industry. The ma

rgins in the construction industry are already slim, which means contractors are significantly less likely to take a risk with new solutions. “The cost of it going wrong is significantly higher than the benefit of just doing something incrementally better,” says Vivin. “You have to have something reliable yet better for people to start experimenting on.”

But if a founder can overcome that cost-benefit barrier, their solution can have an industry-changing ripple effect—a true sign of a space that’s ripe for disruption.

“It is the second largest sector in the world in terms of share of GDP, and it contributes to 40% of emissions from a carbon perspective,” says Vivin. “It contributes to homelessness because of the high construction prices that exist. Infrastructure resiliency is becoming an important topic because urban renewal has not happened, and bridges are falling apart.”

But unlike sexier industries like finance or AI, construction hasn’t attracted nearly as much VC attention: “Because the business has such low margins, there's been no incentive to invest in innovation.”

However, the industry has so much potential, which makes the road to unicorn status a bit less crowded. “[Construction management software] Procore just IPO’d some time back and it almost became a decacorn. PlanGrid was acquired for nearly a unicorn status. Openspace has nearly hit unicorn status, too,” Vivin says.

“So the problem in the past was because there were no startups, there were no exits, and the interest wasn't there in the space. But now there is increased awareness of what the space is about. There is a lot more traction, and the startup landscape has exploded here. And the returns are already starting to show that in some of the largest exits that have happened.”

The World Will Always Need Buildings

Emerging fund managers often identify quiet corners in unusual niches that are truly ripe for growth. With a fraction of the funding that fintech receives, a construction startup has the potential to generate a greater ROI because the target market actually wants the solutions (honestly—how many neobanks and food delivery services do we need?).

Vivin and the Zacua Ventures team have secured their foothold in the construction startup space, not just as veterans of the industry, but as forward thinkers who want to build a sustainable future.

However, I’m sure they wouldn’t mind a few more like-minded folks in the space.