As the set of industries we know as "AEC" continues to evolve, investment in startups is a key driver. Among the largest investors in the built environment is Cemex Ventures, the strategic investment arm of Cemex. As a lead investment decision maker for Cemex Ventures, Mateo Zimmerman has a unique vantage point of the industry's progress and areas for further development. Mateo shares the perspectives Cemex takes on these issues, and how Cemex Ventures approaches strategic partnerships, investment and support for the industry overall.
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Learn more about Cemex Ventures here: https://www.cemexventures.com/
Mateo Zimmerman
Hugh Seaton: Welcome to Constructed Futures. I'm Hugh Seaton. Today I'm here with Mateo Zimmerman, investment manager at Cemex ventures. Mateo, welcome to the podcast.
Mateo Zimmerman: Hi, Hugh. Thank you very much for the invitation and for having me here.
Hugh Seaton: I've had the pleasure of having Cemex on once or twice, but let's assume that listeners did not catch all that and start with, what does Cemex do?
And then what do you do at Cemex?
Mateo Zimmerman: Great. Yeah, I'll start with a little bit of Cemex as a corporate, and how would that has turned into innovation and open innovation? That's what we do at Cemex ventures, but Cemex is very known, it's one of the leading global building material company with a very long history it's very known for obviously it's core products.
It's cement, ready-mix concrete, aggregate and organization solutions. It's a global company, which I always highlight because it's key also for our stakeholders and our partners. It's more than 45,000 people worldwide and presence in over 50 countries. So that is also very helpful for understanding what's happening in the construction industry worldwide seeing different trends that are happening, right.
And, that's a key. And about five years ago we decided to launch Cemex ventures, which is basically the open and collaborative platform to help lead the evolution of the construction industry. And that's by engaging with startups, entrepreneurs, universities, and other stakeholders to tackle the, the construction world's toughest challenges and, and try to shape tomorrow's value ecosystem.
Our motto is how to build a better future together.
Hugh Seaton: That makes sense. And as an outgrowth of CEMEX, the, the broader company, how do you relate to the missions of CEMEX versus being a little more standalone? Cause it's, it's a big operation.
Both of them are big operations.
Mateo Zimmerman: Yes. There's obviously different strategies to open innovation and companies. From the very beginning in semi venture for us, it was very clear. We can't focus on just on the core of what Cemex does, but really what the industry needs is trying to collaborate on a wider spectrum, right?
In our industry, there is so much fragmentation. There is so many players involved. It's so complex that we thought, okay, we have to also look at things from the perspective or the eyes of someone else, right. To try to change it. And do it collaboratively. So from the very beginning we focused actually on, on disruptive business models or innovative technologies, the way I sometimes explain it inside and outside of our company is we're looking for the technologies in 10 years.
So I'm not gonna kind of fill the gaps that the company has right now. We could do it for very specific things that are happening right now and trends we're seeing right now, but our idea is okay, what's gonna be the company in 10 years and, and we're partner with we, we will be partnering with companies won't have anything to do with, with CX in the future and others that will do. Right.
But I mean, you'll never know, right? What this what's the direction that that XX will, will take. I mean, we, we know a little bit, but sometimes it takes some paths that you would've never imagined.
So yeah, that's the main idea. So there's things where we partner with a company and five years later there was a collaboration with CEMEX. Sometimes there was already a collaboration with CEMEX at the point. And there's other companies where there is no collaboration with CEMEX and there will never be.
But I think at least from a strategy perspective kind of solving some pain points of the industry and from a financial perspective, it makes sense to partner with those startups.
Hugh Seaton: Yeah. I liked that you pointed out a horizon that you think at so you think at a 10 year horizon, as opposed to a two year or three year or whatever, I think that's really exciting.
And it speaks to what venture capital is uniquely good at is, is making bets that by definition have high uncertainty because they're further out, but that's what happens when there's competition and there's lots of people trying to solve problems is you can't know too much about what's gonna win and lose.
So you're placing bets on the assumption that some of them will win and some of them won't. And do you find that as a venture capitalist, within a larger company, that gives you the freedom to think at at longer time scales than you normally could?
Mateo Zimmerman: Exactly. That's right. I mean, we're more of a patient investor.
Because we're not just thinking about the, the financial return, which is obviously one of the, the big drivers, but also strategic returns. So sometimes you can balance between okay financial return and strategic return. So we always need, there has to be a financial return that's for sure. And then we, we try to, okay what's the strategic fit or the strategic balance that we bring also into that operation.
Hugh Seaton: Yeah. It's funny. In the in the association world, there's a saying there's no mission without margin. So if you don't have a functioning business, it doesn't matter how strategically valuable it is. It's gonna die be, or you're gonna be funding it for the rest of your life.
So if they can't run a business who cares, what else they do?
Mateo Zimmerman: we say also kind of the best strategy is the one that we yields highly returns, right?
Hugh Seaton: Yeah, that's right. It's a pretty good outcome. And you know, living within the world that you get to see as being part of an entity like CX ventures is bigger than some folks in that you mentioned before you're in CEMEX is in, in a bunch of different countries. And actually CEMEX ventures is famous for some of the competitions that you do. You wanna talk a little bit about your global view and, and that competition I'm talking about, which I predictably am not remembering the name of.
But wanna talk a little bit about how you guys have a more, have a nice global view and how that helps.
Mateo Zimmerman: Sure. Maybe I haven't properly introduced also myself, but the team that has been working and, and driving Cemex ventures in the last year. So I've been working with some Cemex Ventures for the last five years.
I come actually from I'm an industrial engineer, so I have nothing to do with construction initial. But then kind of from that industry evolved to construction, which is interesting, but I worked a few years in private equity. I worked for five years at Boston Consulting Group, where actually I focused on the industry practice and on the industry practice, it actually involves construction.
And when I first kind of started doing some projects in construction, I said, I mean, I don't know why this is called the industry practice or why it's within the industry practice. It has nothing to do with industrial companies. Right. So, and that was interesting, but for me, it was fascinating.
Seeing how an industry can work so different to others and how other industries have evolved compared to construction. And I still think construction is the most complex industries of all. I mean, I've worked in several industries and I still think that construction is, is most challenging.
And I think sometimes the engineering work kind of the prototyping, cause we're still doing prototypes. It's much more complex and more difficult. And, and the work that people do is much more kind of challenging than, than any other industry. Right. So, that's what I thought was fascinating.
And then when I had the opportunity of saying, okay, the mission of Cemex Ventures on how we want to change our industry. I think that for me was challenging on one side, but also fascinating. Right? So I work with also with Gonzalo Galindo. I think you, you invited him a few months ago to also to speak here.
And just to kind of going to your question, I mean, in terms of the things that we do, for us, it's, really five activities or five purposes that we have, right. The first one is obviously very actively looking at what is happening in the market. So watching new trends, new technologies as any other investor. But I think we have a pretty good way of doing it so we can identify the things that for us are more relevant. Right. So also taking priorities within our industry, which is also not easy, right. Because we focus very much on topics or pain points instead of okay. Let's have a I don't know, just a startup that is reaching out and saying, yeah, let's hear it right.
We're laser focused on a few things, because we're doing a lot of effort there to, to understand the, the trends. Then the other activities that we have is basically, so we invest we have a VC arm within some ventures we have invested in 20 companies so far and, and kind of in early stages. So seed and series A. The other activities that we have also, we have some incubations.
We have three projects right now that we are launching, trying to use that unfair advantage of being a very large company and present in, in a lot of countries. And, and obviously a very big network. The other thing that we are setting up right now is actually more formal acceleration, or let's say collaboration framework with startups to create those win-win situations for the startup and for Cemex. How to accelerate the collaboration. Because if you don't put like a process or a, a framework it will be slower.
So we're trying to speed that up without acceleration program. And the other part, which I also you referred to is, is when we, we call it kind of creating an ecosystem.
Right? So as, as I said before, it's a very fragmented industry. So what we try to do is having or provoking a lot of different conversations with other stakeholders in the industry. Just to understand their perspectives what are their pain points? What kind of are for them, the, the most significant trends and priorities.
And we do that obviously on a very frequent basis. But we also have a few programs, like, for example, as you mentioned before, the construction competition, which is the largest startup competition in the construction industry. And we do that with, with some amazing partners that we we've been working with some of them already for three years in a row.
So that's been amazing. And we have other initiatives that, for example, we in every now and then we have our top 50. So we do that every year, where we name some of the most significant startups. So we can't invest in all of them. But we're super excited about a lot of them. So we try to stick to 50, which is a list that it's not just us, but we, we do together also with, with, from the discussions we're having with, with other partners in the industry.
Hugh Seaton: That's great.
And yeah, from a partnership standpoint, I know you guys have done a really good job of working with some folks that are downstream of you, like some of the contractors and other folks. So it's a really good representation of the industry as opposed to being from one or two viewpoints, which I I've always thought was really great.
Mateo Zimmerman: Yeah. I mean, in the startup competition, for example, it's, it's we have big names in the industry. So everyone will know, for example, Black and Veatch . We have Ferrovial, we have Hilti, Leonard, which is the, innovation program from Vinci program from Vinci .Nova by Saint Gobain, GS Procore, Dysruptek from Haskell and Zacua Ventures.
So, I mean, it's great because everyone adds different perspectives to the same solution. So everyone is seeing the different solutions in the market, but just being on the same table and discussing all that, just kind of the questions that you asked to the startups the collaboration that come from there.
And just sharing insights after discussing with the startups and the, their ideas. It's just very, very interesting also. And, having that insight also helps us a lot on, okay. What are really our focus areas for us?
Hugh Seaton: Well, that's a great segue to talk a little bit about some of the focus areas for you. And one of the things that we've talked about, even in the run up to this is the whole movement towards green building. Do you wanna talk a little bit about how you look at that and we can get into kinda what you're doing about it?
Mateo Zimmerman: Yeah, sure, happy to.
So obviously it's very broad kind of the solutions and there's a lot of it. There's a blue ocean in construction to improve or, or do better. So, but when we narrowed it really to four target target areas and the first one is green construction. As I said, and that's becoming more and more important.
And when I say green construction, it's really also including technologies regarding Cleantech. Cleantech focused on buildings, obviously. Or construction in general, but we are focusing on technologies like decarbonization. So CCUS or carbon capture utilization and storage. We're talking about sustainable materials, circular economy, waste management and recycling, which is also a, a very, very important topic.
And also new energy sources and solutions. That's the first one, the second one, which has been always very close to our heart in terms of... Because we know it's a big pain point and also because CEMEX suffers from it. Right? So from the very beginning, all the kind of, whenever we talk to CEMEX, they say you have to focus on supply chain that's where the problems are.
But it not just obviously from a building material company, but also construction suppliers, builders, drivers, everyone involved. So there we focus on solutions around procuring materials and resources, marketplaces logistics tools, fleet management, and dispatching from the site of a supplier but also delivery marketplaces and last mile delivery solutions, but also kind of more on site like inventory management and on site handling.
The third topic is, as we know, kind of regarding the productivity gap we call it enhanced productivity. So everything that, especially in the design and execution phase, which are the phases are where there's more friction, let's say and more misalignments of the purpose or what needs to happen before I do what I need to do.
So that's really in design and execution. So there we focus on, on all the different phases there. So from, from the design really on then the handover to construction, to also planning and scheduling, everything around project monitoring, and control, also document management. So how to capture kind of all the data that is happening on site, kind of more efficiently, but also very important things like health and safety.
But also assessing quality and everything also around asset management and maintenance. And the last topic is kind of more, we say, it's more kind of future based, but we said, but it's not really the future. So we called it construction's futures now, so there we include all around advanced building materials 3d printing, industrialized construction robotics and smart cities and buildings.
And we said, this is not the future because it's happening now. But it's really what we wanna say. It's okay. This is really new methodologies or new processes of construction, which will take time. So it's a different kind of animal but it can solve a lot of the pain points that we see in the industry with the kind of high fragmentation.
And even that, that we still build prototypes. If we try to go more into standardization or new ways of doing things where everyone is comfortable and, and kind of doesn't change completely the risk profile or kind of the legal complexities, or even the financing challenges. That's very interesting.
Right. And yeah, and just going back to maybe green construction is, is where we have focused a lot lately just because... 40% of the greenhouse gas emissions come from construction and building operations. So it's a very clear need and we have to do something about it.
Right. So we're very committed to trying to help out there.
Hugh Seaton: And how do you help? So when you think about what you're in a position to do to push that forward, one of them obviously is investment, but as you've said, you can't invest in everything you like. You've assembled a broad array of tools to help.
So when you think about green building and you're pushed to make that come about more quickly, what sorts of things do you do?
Mateo Zimmerman: So, one of them is investing and we're very proud to support the 20 companies in our portfolio. So that's one, but obviously what we see is in, especially in green construction, we're seeing there is a lot of value also in trying to help in using and piloting and testing and doing commercial relationships with startups in some of the fields. And obviously, I said before, we don't focus on the core, but there is that very important need, obviously, for example, to decarbonize the cement industry.
But most of the technologies, even it's not just about the cement industry, where we're investing. Carbon capture utilization and storage is just not exclusive to the cement industry. It can be applied to other industries, but obviously cement, steel is very particular to construction.
So we're trying to do there. And also co-investing with other people from other industries, like the automotive industry, oil and gas which I think is very interesting. And we're very, very Happy and very kind of looking forward to do actually more in, decarbonization because also from the trend that we're seeing and the necessity for these kind of solutions, I think it...not just the regulation, but also the funds that are flowing to this kind of from the private public funds, large companies, I think it's, really kind of thriving. So we're very excited to be part of that.
Hugh Seaton: So are you hearing that actually owners and real estate companies are more and more looking at this, right? So you talk about incentives that drive it. The government is an obvious one, especially in, in parts of Europe, but it certainly in the US, you're seeing actually companies that are saying we're gonna invest in, you know, a building that we're gonna own for 40 years.
From a risk standpoint, we need to be on a, on a solid environmental footing now, because we know we're gonna pay for it in five years, or maybe it's 10, but at some point this is gonna be a risk for us. So let's get into it now. Are you hearing that a lot?
Mateo Zimmerman: Yeah, of course. I mean, I think it's the really good companies they understand.
This is not just hedging in terms of regulation. I think it can become actually differentiator. And differentiation, not just in terms of brand, but also in terms of operations. So, I mean, we're talking about from the 40% of the greenhouse gas emissions in, in construction and building operations.
I mean, just building operations is, is 28% of that. And, and we're talking out here about building operations, which is really reducing the energy consumption. So, I mean, this is less operational costs as well. Right. So it pays off.
If you have a short term vision around building and just okay, build and sell, it's more challenging. But if you're building and operating, it will pay off. For example, at least in kind of when we talk about buildings, right. I think. It's a no brainer. And we're seeing that, I mean, even a lot of industry, not just our industry, steel industry, they say there's no other way.
I mean, in order to be sustainable, not just kind of green or, climate conscious, it's a sustainable business model. There's no other way and there's no going back. So I mean, a lot of companies are doing very, very aggressive targets on how to become net zero, I don't know, by 2050.
And, and I mean, it's a big challenge. The other day I was reading actually the pace has to be three times faster in the next 30 years than the last 30 years. So it's an immense challenge and every little bit of an effort is very helpful. And that's also what we're trying to do with Cemex ventures.
Okay. If there's a company that we can do a pilot with on one of our Cemex plants, for example. So it's not just, okay, Let's try to put a pilot in place, but also let's try to support them also kind of via investment and that is kind of really accelerating the... I always say that's a win, win situation where it's Cemex that is benefiting, it's Cemex ventures, because we're, it's a big customer and, and also the startup. So that's the, the best of all scenarios.
Hugh Seaton: That makes a lot of sense. And where are you seeing from a kind of practical You know, what companies are offering, what sorts of things are you seeing in market now that are driving towards this, this broader point of, of green construction?
What, what sorts of solutions?
Mateo Zimmerman: So we have been working with a lot of companies, and obviously we'll try to support the ones that we believe also from a financial perspective makes sense. So for example, we invested last year in a company called carbon clean . And we have reinvested this year because their kind of traction they're seeing is amazing.
And other very important players also co-invested with us in, in this round and they do basically carbon capture. And it's a very interesting concept because it has to be also adaptable to the requirements. Right? So today I need to capture, I don't know 100 tons of CO2, but I need to be able to make it more modular so that I can, okay.
Next year, probably it's two, 200, but you know, how can I grow that without saying, okay, no, this is already old. Right? So they have a very interesting technology to be able to do that and, and adapt to the, to what the customer needs. And just capture that C02. And then obviously there's other things that are once you capture it.
Okay. How do you do, do you utilize it? Right. So there's another company that we're working with. There's called carbon Upcycling. Which is exactly okay. Using that, that that CO2 to convert it into products that have a value in the market. Right. And we're seeing that, not just with, in this case, it's actually producing additives for the cement.
But in other cases, actually, we're seeing that okay. With CO2. And, and hydrogen, for example, you can create like a synthetic gas, right? for which is, is good for energy. So we're also seeing kind of that there's a trend that CO2 was a burden and it's, it's a burden, but there's starting also to emerge some technologies to convert that actually into something valuable.
So we're changing actually from having carbon credits to actually selling, selling it. Instead of a cost, it'll be a kind of a revenue.
Hugh Seaton: That's amazing. You know, it speaks to, again, the value of a venture capital approach where there's. Resources put behind somewhat speculative ways of, of solving something that, you know, five years ago, most people would've probably said, well, the way to make money from carbon capture is by offsets and by selling, you know, selling the ability for a company that, that can't help, but to emit.
To be able to offset that. And, and what you're saying is that, you know, because there's resources in the market, people will try things and, and really think around the problem. And, and, you know, again, it's just, the inventiveness is, is really amazing when there's enough time and there's resources to support things which is really exciting.
Mateo Zimmerman: Yeah. It's amazing how technologies can shift something... an industry completely right. We, so kind of one of our portfolio companies that I'm very excited about is soil connect. Soil connect is really a platform that is connecting the ones that kind of, if, if you're doing ground works, all the earth movement that that you're doing, you have extra soil that normally you would pay someone to pick it up, right. In this case, actually it becomes, okay, someone else is, needs that kind of for to fill some, some, some holes, right. Or kind of just for land filling or, or whatever. So they're willing to pay for that. So, It's that combination where, okay, that was a cost for me now it will be a revenue source.
So it's interesting how technology can shift some of these things and not just kind of with software and connecting stakeholders, but also kind of obviously more kind of hardware solutions, like, like in the case of carbon capture. And, these are some examples, but for example, we've invested in a company called Synhelion in Switzerland, that was actually the first to produce a clinker just with solar power, right? So that's the first one, which is also very interesting because you don't need any, any kind of fuels and fossil fuels to, to produce that.
Hugh Seaton: That's really exciting. And I mean, you know, you speak about technology. It's also the entrepreneur who's pushing to make this get adopted.
And I mean, you know, technology sets you up to win, but ultimately it's the company that pushes it through and lasts. Right. Super exciting. So let's bring this one in for landing I'd I'd ask you, where do you see things going?
Mateo Zimmerman: Good question. I mean, Obviously I, I won't speak more about green construction because that'll be a, a great driver for, for us, but I think I'm also very excited about supply chain in construction.
So for a long time, actually, we've been looking at, okay, what's the best way actually, to, to procure materials, procurement is very inefficient process. So we're seeing a few solutions there. Obviously we looked at marketplaces for example, for material, which is, it's a pretty challenging space.
It will come, but kind of timing is the key here. Right? So so we're just, I would say we're still at, as I always say, and you were speaking about entrepreneurs that's really the key and kind of the understanding of the, the industry and understanding that this is kind of going step by step by probably we're talking about here and kind of 2.0 technologies, right.
And trying to have a humble approach and understand the problems of the customers spend some time with them also to, to, to solve their most immediate problems. Right. And one of them, for example, is really in procurement, how broken it is in terms of the communication of, okay, I need a material, it needs to be approved.
It kind of then goes through the procurement department who purchases it and then goes to the supplier. And that's kind of, there's a lot of point of failures there. So if, if just a digital solution that can connect all of that and having more visibility on the materials, that's, that'll be great.
And, or, or I'm also very excited about. What I call the single source of truth of all the materials that are coming to the site. That someone or a platform can give you transparency on, okay. This is all the materials that are coming in and. And, and having the data of all that, not just for the data of okay.
What's, what's the cost of that, which is very interesting, but also then going the next step on in terms of, okay, what's the, the source, what's the carbon emissions of all the different components of a site and with that insight, obviously taking better decisions and more conscious decisions.
Also not just in terms of cost and, and CO2, but also in terms of timing, in terms of supplier. In terms of what's working and what is not working. Right. So, so where we work with a company called Voyage Control which is very interesting because they're exactly capturing all that material that is coming in, but also just to be able to, to book, for example, the crane and, and being able to, to, to move the materials also on, on its side and making sure that when a material arrives, everything is ready, right. The gate won't be kind of blocked that there is enough space to unload the material that the crane will be ready. Which is very interesting, especially for very large projects. Right. And, and, and then we have, then we have other very interesting kind of concepts and, and in our portfolio that, that we're seeing as well that are working pretty well, which is obviously all around progress monitoring, detecting the progress of, of a site, not just kind of by videos of, or photographs, but also kind of measuring that automatically comparing to the BIM model, having the as built. And then for example, we have been kind of early investor StructionSite, which is performing really, really well on that, on that front and, and, and yeah, we're really excited about that as well.
So I mean, a lot of things get us excited. And I, a lot of thing, I mean, this industry is, is one of the most important industries in the world. So we we're really excited about, we think there's a blue ocean. There's, we're still there. There's a lot to do still in the industry. And we'll be trying to support all the entrepreneurs out there that are trying to, to improve this industry.
Hugh Seaton: Fantastic. Well, Mateo, where should somebody reach out to you if they've got a great idea?
Right now we have actually the construction startup competition open , which is kind of the best way to engage, not just with us, but, but all the partners that I mentioned before, I think that's a very good platform because. ..So there'll be a pitch day at, at the Procore event, the Groundbreak event in new Orleans. So I, I think that that's a very good opportunity if you gonna find all the information at our website cemexventures.com. Yeah. You can reach out through LinkedIn we'll be sure to get back to, to all the people that want to engage with us.
Fantastic.
Well, Mateo, thank you for being on the podcast. I've loved hearing more about how you view the world and how you guys are, are working to make it a better place.
Mateo Zimmerman: Thanks for the invitation Hugh and thank you very much for, for having this kind of podcast for and giving more light on what is happening on the industry and sharing some insights of very interesting insights from also other, other people and good, good friends from the industry.
Hugh Seaton: Fantastic.v