Why VCs Keep Getting Construction Tech Wrong (According to SubBase’s Founder)

Why VCs Keep Getting Construction Tech Wrong (According to SubBase’s Founder)

In a recent episode of Category Visionaries, Eric Helitzer, CEO and Founder of SubBase, a construction materials management platform that’s raised $5 million, called out a pattern he’s watched unfold across the construction tech investing landscape: “A lot of them are coming without prior knowledge, and they’re trying to, in my opinion, and I’ve talked to a lot of investors, they’re trying to take what other industries have done and bake it into construction, and that’s not the way it is.”

Venture capital is flooding into construction tech. The market is massive—trillions of dollars globally. The technology adoption is decades behind other industries. The opportunity seems obvious. But Eric’s warning, earned from 15 years in construction operations before founding SubBase, exposes why most construction tech bets fail: investors mistake market size for market standardization.

The Trillion-Dollar Trap

When Eric discusses the construction market, he doesn’t shy away from the numbers. “Some people say it’s trillions, some hundreds of billions. As far as materials, well, globally it’s trillions, but the market is so big, but it’s also so fragmented.”

That last phrase—”also so fragmented”—is what most investors gloss over. They see the trillions and start pattern-matching to other trillion-dollar industries they understand. Enterprise SaaS. Fintech. E-commerce. They assume construction will consolidate, standardize, and scale like these markets.

It won’t. Because construction isn’t like those markets.

“The biggest challenge we saw when investors came into the space, is how do you not just systematized, but how do you really centralize all of these applications and construction in general?”

The question itself reveals the misunderstanding. Construction doesn’t want to be centralized. It’s not resisting technology out of stubbornness—the industry’s structure fundamentally resists standardization.

Why Construction Isn’t a Playbook

Eric’s clearest articulation of construction’s difference comes when he addresses the playbook thinking directly: “Construction isn’t a playbook.”

He explains why: “Every project in construction is unique. Every process in construction could be tailored to a specific company because the projects are so unique.”

This isn’t marketing spin or industry romanticism. It’s operational reality. “A single building that gets built has so many different pieces and so many different parts and so many different people. It’s all custom. Every building that is built in the world is custom.”

Even when construction tries to standardize, customization creeps back in. “There is no print, copy paste, even the modular buildings that are being, you know, let’s call it built. There’s still customization and like the foundations or where, like the underground civil infrastructure.”

This creates a fundamental mismatch with how VCs think about software. SaaS investors love playbooks. They want repeatable sales motions, predictable conversion funnels, standardized implementation processes. They want to see what worked at Salesforce or Slack or Stripe and apply it to your market.

But when every construction project is custom, every sales process becomes custom. When every company tailors their processes to their specific projects, your software can’t force standardization without losing deals. When every building requires different approaches, your implementation can’t follow a fixed methodology.

The False Promise of the Figured-Out GTM

Eric identifies another mistake investors make: assuming someone has already figured out the go-to-market motion. “What I think a lot of investors get wrong is they think it is a much easier go to market motion or that there is a figured out go to market and there is not.”

This expectation—that construction tech should have a clear, proven GTM playbook—stems from investors’ experience in more mature software categories. In enterprise SaaS, you can study how the category leaders built sales. In developer tools, you can follow the bottoms-up adoption model. In fintech, you can map the partnership and distribution strategies.

Construction tech has no such roadmap. Or more precisely, it has dozens of potential roadmaps because the market fragments into dozens of distinct segments, each requiring different approaches.

Eric runs four simultaneous GTM channels at SubBase—word-of-mouth, outbound, educational marketing, and events—not because he’s indecisive, but because construction’s fragmentation requires multiple approaches. There’s no single channel that reaches everyone who needs his solution.

This operational complexity intimidates investors who want to see clean, scalable growth models. But it’s reality in construction. And founders who try to force clean, scalable models onto construction typically fail.

The Complexity Barrier

Eric points to complexity as the core reason construction has been slow to attract serious capital and technology adoption: “Because of the complexities of the business, it takes a lot of these companies a lot of time to understand it.”

The layers matter. “All the different layers of a business in construction, starting from the owner and then going down to the GC and then all the trades and all the materials, the vendors involved and then within the vendors, all the different materials.”

Most investors can’t hold this complexity in their heads. They want simple value chains: supplier → buyer. Or simple workflows: input → process → output. Construction has owners, general contractors, dozens of specialized subcontractor trades, hundreds of material vendors, and countless project-specific variables.

“So I think that there’s a lot to chew on and obviously there’s been companies that have done a great job raising awareness and proving that there’s a huge market here. Procore is one of those.”

But Procore’s success doesn’t mean construction has standardized. It means one company found one wedge—general contractor project management—that could scale despite construction’s complexity. That doesn’t make the next wedge equally scalable.

The Domain Expertise Moat

What Eric describes, without explicitly stating it, is that domain expertise becomes an insurmountable competitive advantage in construction tech. His 15 years in construction operations gave him insights no amount of customer interviews could replace.

He knew which workflows created pain because he’d lived those workflows. He knew what subcontractors would pay for because he’d been the one making procurement decisions. He knew how to sell to construction companies because he’d been the buyer.

“It takes years of experience to really understand the business. And I think that’s really the been the biggest challenge is them understanding the business and really diving deep into all the different nuances of the construction world in general.”

VCs without domain expertise can’t evaluate which construction tech companies actually understand the industry versus which ones are applying surface-level solutions to deep operational problems. They can’t distinguish between founders who’ve lived the pain and founders who’ve interviewed people about the pain.

This creates a selection problem. Investors fund teams that look good on paper—ex-Google engineers with impressive technical credentials—over founders who spent 15 years in construction operations. They optimize for the wrong signal.

What This Means for Construction Tech Founders

Eric’s critique of VC understanding isn’t nihilistic. Construction tech is getting funded. The venture markets are “definitely opening up to construction technology and it’s super exciting to see because they’re starting to make bets.”

But founders need to understand what they’re walking into. Investors will want playbooks that don’t exist. They’ll push for standardization that won’t work. They’ll expect go-to-market clarity that construction’s fragmentation makes impossible.

The founders who succeed will be those who can articulate why their lack of a standard playbook isn’t a bug—it’s the accurate reflection of market reality. They’ll need to explain why their multi-channel GTM approach isn’t unfocused—it’s necessary coverage of a fragmented market. They’ll need to demonstrate that their domain expertise creates a moat that Stanford CS degrees can’t replicate.

The Investor Education Challenge

Eric’s somewhat diplomatic about the state of construction tech investing: “Those bets are allowing companies like SubBase to actually get into the market and be able to make a name for ourselves. So it’s definitely changing and we’re super excited about what’s going to be happening over the next couple of years.”

But between the lines is a harder message: most VCs still don’t understand construction. They’re making bets based on market size and technology gaps, not based on deep understanding of construction’s operational reality.

This creates opportunity for founders who do understand. If you’ve spent years in construction, if you know the workflows intimately, if you understand why standardization fails—you have an advantage that capital alone can’t buy.

The challenge is articulating that advantage to investors who keep asking for playbooks that don’t exist.

The Pattern Beyond Construction

Eric’s observations about construction apply to any industry that resists standardization. Manufacturing, healthcare, agriculture, logistics—all have similar dynamics. Massive markets. Clear technology gaps. And fundamental structures that resist the cookie-cutter approaches that work in software-first industries.

Founders building in these markets face the same challenge Eric does: convincing investors that the absence of a clear playbook isn’t a weakness in the founding team, it’s an accurate reflection of industry reality.

The trillion-dollar opportunities are real. But they won’t be captured by copy-pasting SaaS playbooks. They’ll be captured by founders who understand their industries deeply enough to know why those playbooks don’t work—and what to do instead.

As Eric puts it simply: “Construction isn’t a playbook.”

The sooner investors learn that lesson, the better their construction tech bets will perform. The sooner founders internalize it, the better they’ll navigate fundraising conversations with investors who haven’t learned it yet.