Deal focus: isBIM targets real estate’s digitisation catch-up

In 2015, McKinsey Global Institute ranked 22 industries based on adoption of digitisation. Construction came next to last, head of agriculture and hunting. Agriculture has since surpassed construction, according to Jonathan Ma, a director at Hong Kong-based construction technology start-up isBIM.

The industry’s patchy track record on digitisation gave impetus to isBIM’s business model. The company was founded in 2010 by Elvis Li, a project manager with several real estate developers who became a building information modelling (BIM) consultant. He launched isBIM in this vein, tapping into the surge in property and public works projects across Greater China at that time.

Technology loomed large as an underleveraged opportunity in a highly fragmented industry across design, construction, and facility management. Huge cost, efficiency, and sustainability gains seemed achievable with a platform that integrated the long tail of different stakeholders: government agencies, developers, contractors, sub-contractors, and consultants.

IsBIM is intended to serve this purpose. The company – which recently received HKD 46.8m (USD 5.9m) in funding from Gobi Partners and MTR Lab, a technology arm of Hong Kong public transport operator and property developer MTR Corporation – created Jarvis as a platform for 15-plus apps. It also provides industry training and certification services and has a VC unit that backs other construction tech start-ups.

Selling the idea to developers wasn’t easy. “They didn’t want to change. Only a few, maybe 5% at most, were innovative or forward-looking. When we spoke to senior management, they wanted to save money, reduce risk, and have more control over projects, but they were not welcoming of technology,” said Li.

“When I worked as a project manager, we faced a lot of challenges, a lot of money was lost through wastage. We were using old, paper-based technology. Even though construction accounts for a large share of GDP, while other industries have gone to 4.0, we are still at 1.0.”

Proving grounds

Ma described a long education process that has since been formalised through isBIM Academy, which provides bespoke training programmes for companies as well as acting as an industry certification body. Regulation has also contributed to uptake, notably a string of Hong Kong protocols around BIM adoption and technology-enabled construction site supervision and safety management.

“This is not unique to Hong Kong. Government plays a crucial role because one of the biggest obstacles to digital adoption in the construction industry is specialist drag,” Ma said. “The average age of a construction worker in Hong Kong is 47. Technology isn’t something that comes to mind when they initiate a new project. There are architects who have been doing the same thing for three or four decades.”

IsBIM was helped by some early wins. MTR Corporation was a relatively early adopter, using isBIM’s solutions to integrate drawings, approvals, and inspections across a range of interlinked projects, including the East Rail development. The company has since launched, iSupervision 2.0, an in-house platform that consolidates workflows.

Another project involving 20,000 7-Eleven stores in Japan led to a 5% reduction in annual construction and maintenance costs. Similar scenarios have played out elsewhere. Key pain points addressed include data and delivery time: 5,000 physical papers can be replaced by 1,000 well-categorised PDFs, while potential errors and defects can be identified during the design phase rather than during construction.

The funding from Gobi and MTR Lab represents isBIM’s first institutional round. Chibo Tang, a managing partner at Gobi, considers the company to be one of a clutch of Hong Kong start-ups gradually gaining traction without relying on external capital and turning to VC funding when they want to accelerate growth or target a wider set of geographies.

“The overall software package is what construction companies would pay for to get a bird’s eye view of what is happening on site and minimise safety issues. They’ve got a decent amount of revenue traction, here in Hong Kong and in the mainland,” he said.

Gobi invested via its Hong Kong-based GBA (Great Bay Area) unit, which is currently deploying a second fund anchored by Alibaba Group. Tang noted that isBIM is a good fit for the mandate: founded in Hong Kong, expanding into the GBA, and facilitating digitalisation in a traditional industry.

Expansion plans

At present, 17% of isBIM’s revenue comes from Hong Kong and 30% from mainland China. Four-fifths of the mainland contribution is GBA. The company is also active in Japan, Southeast Asia, and the Middle East. It has worked on more than 2,000 projects to date with over 500 construction organisations.

There is an even split between revenue from private property developers and public works projects. Focusing on the latter offers some insulation from cyclical shifts. The typical market entry strategy involves reaching out to government authorities first and then targeting major independent contractors and sub-contractors.

According to Ma, isBIM has plentiful cash reserves and is in no rush to deploy the new capital raised. About 35% of the proceeds will go towards M&A, 30% to software development, and the rest for sales and marketing and other initiatives. Priorities include building out Eagle Eye, a digital twin tool that captures physical space and renders it virtually, layering on various artificial intelligence analytics.

On the M&A side, isBIM is interested in relevant technologies that can be plugged into its platform – and many are available at attractive valuations because of industry-wide stress. The company is currently pursuing a modular integrated construction (MIC) business – it enables the prefabrication of building units and their subsequent assembly on-site – that has a strong track record in Hong Kong.

“Ten years ago, people thought there would be quality issues with MIC, but now, even five-star hotels are using it for façade development. It drives down construction costs and development time significantly. Shenzhen has become one of the most urbanised cities in China through MIC, supported by a GBA supply chain ecosystem that reduced projects from three years to three weeks,” Ma explained.

“I recently visited Riyadh and Jeddah and they are crying out for MIC.”

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• Topics
• Greater China
• Early-stage
• Real estate
• Technology
• China
• Hong Kong (China)
• Greater Bay Area
• Gobi Partners