Why we doubled down in 011h’s €25M Series-A to decarbonize European multi-family homes

July 8, 2022

Why we doubled down in 011h’s €25M Series-A to decarbonize European multi-family homes

Wood TF just happened ?

Homes. Since the early dawn of man, we have tried to perfect the four walls around us and our families (or early on – the caves around us). Depending on where you stand on the spectrum of creationists, darwinists and ancient-alienists, you might believe in slighty different timescales since the dawn of man – but regardless of your viewpoint, we are talking thousands of years (plus) since the dawn of man.

I’m a Big Bang Theory dork

So, you’d think: Hey, in thousands of years, we should have perfected “the home”. Well, I don’t think we have. At least not yet.

Today, news broke about 011h's €25M Series-A, led by our friends Harald, Mira and their team at Redalpine, and with participation from Breega, Seaya and several other great backers.

We had co-led 011h's €8M seed round in December 2020, and are proud to continue backing Lucas and the team with fresh money as part of this massive raise.

In our view, 011h (en: zero eleven aitch) is finally perfecting homes. Not decoration, not optics, not shiny vanity penthouses for millionaires. But how rapidly and how clean and at-cost we can industrialize multi-family homes for the broad population across Europe.

011h is a radically scalable platform for multi-family homes in Europe to develop fast – and most important – at lower cost, at quality and with net-zero carbon.

Flush with cash now, let’s see wood TF the crew at 011h is doing to revolutionize multi-family homes.

Oh, and spoiler alert – if you read carefully, you might also find somewhere wood TF the name 011h stands for

Wood TF is a general contractor ?

In construction, we historically find two types of contractors:

There are A/EPC firms – which stands for architecture/engineering, procurement and construction. These firms assume a construction project from soup to nuts. A/EPC firms house a wide skillset – from specialists who design and run engineering calculations, to purchasing teams, and of course most importantly, construction managers, site managers. In some cases, A/EPC firms are further integrated as self-performing, which means they have construction workers and on-site engineers performing actual construction trades. Depending on how vertically specialized the A/EPC has become, some even conduct development, permitting and financing parts of the value-creation. Examples of some of the largest A/EPC firms are Technip, Hyundai Heavy Industries, Samsung (yep), or Fluor.

The other type is what’s more commonly known as a general contractor (GC): They accept the general responsibility to deliver the outcome of the construction project on time – and thus assume and buffer commercial risks – and to acquire and coordinate the required skills, manpower along the project schedule. A GC’s value creation often starts after the development and financing is done by someone else, and most GCs on the planet are not self-performing. That means, most GCs have the model to find sub-contractors to deliver manpower for specific jobs on the project (eg. electric works, plumbing works) and to acquire parts of the materials.

While A/EPCs have a very wide value-creation – they are much rarer and much more specialized. Classic GCs on the other hand, have a more narrow value set – but make up the majority in the market.

What you might have noticed is that with the many GCs out there – the A/E + P parts (and even some C parts) are outsourced to sub-contractors and consultants.

And that’s unfortunately how the vast majority of projects and homes in the world are being delivered …

Simplification. Yes, there are A/EPCs for housing and GCs for industrial plants

If you’ve read our data on CO2 last year, you recall that 17% of the world’s carbon emissions unfortunately are caused by construction. Seven teen purr cent.

So, let’s overlay the CO2 data in a super non-scientific way and see where the majority of carbon emissions from construction sit:

Some data: https://foundamental.com/perspectives/the-difference-between-contech-and-proptech/#h-saved-the-best-for-last-co2-reduction-is-bigger-from-contech

As you can see: Housing projects done by GCs offer a lot of carbon avoidance potential.

So Wood TF does all this have to do with 011h? Everything.

The European Solution: Tech-enabled GC using timber on a platform

In Europe, other than the US for example, building multi-family homes with concrete+steel is the norm in many markets.

While concrete is by far not as damaging to the environment as some headlines suggest, the sheer amount of concrete volume is posing a massive opportunity to reduce emissions. After all, concrete is the second most consumed substance in the world after water. It is an amazingly scalable and cost-effective material.

We are big believers that we should shoot for silver bullets, but not rely on a single silver bullet, to fix the built world’s emissions. And we better do it very quick.

Therefore, we are excited to back firms that help solve concrete’s carbon footprint and maintain volumes of low-emission concrete – and we are equally excited to partner with founders who complement the world’s concrete use through other scalable, and equally cost-effective, net-zero building methods.

This is where Lucas, Jota and the 011h crew come in.

011h is

a tech-enabled and asset-light construction platform

building a supply chain of partners and scaling their decades of experience

onboarding all partners on 011h’s core software stack

and prescribing a grid-dimensioned stack of timber building components

which becomes possible because they are focused on one asset-class (multi-family)

for developers who build-to-rent and who continue to manage and operate the building

and who are thus inherently motivated to drive carbon emissions to net-zero.

Now, you might think: So what? There was a particular off-site construction company (Katerra) who raised more than $3B and claimed to transform construction by becoming automotive-like in their production.

The thing with firms like Katerra was: they never were automotive-like in the first place. A modern automotive OEM is the opposite – it designs and engineers a certain car model platform (a building stack), prescribes the drivetrain, chassis, electronics and all other components (windows, walls, plumbing and electric). It then qualifies and binds a network of suppliers on these prescribed designs and components.

What a modern automotive OEM keeps inhouse is (i) the software (ii) final assembly of all components, (iii) the supplier network and (iv) brand and distribution and aftermarket. That makes an automotive OEM a platform – a scalable platform – and not an asset-heavy factory. The likes of Katerra never were automotive-like in the first place for that reason – they were not a platform.

011h is an asset-light construction platform that resembles the automotive OEM platform approach.

(i) In its core, 011h is a stack of self-developed construction management and supply chain management software (on top of which certain market/off-the-shelf software is integrated). Each supplier and sub contractors to 011h's building projects gets qualified and onboarded onto the core software stack, and has to work with and deliver into the software.

Some sneak peek of 011h’s software stack

Their software stretches from building design with a fully integrated BIM down to the atomic object level (a screw head, its production cost and CO2 footprint – no joke – for a screw head …), and expands all the way to the frontline execution where workers on-site are fed with eg. touchscreens to have standup meetings to discuss the placing of the screw head on the ground.

This became possible because 011h has designed standardized building models fully in BIM, and has onboarded all its suppliers to the model and the software.

(ii) The 011h team controls all assembly on site, informed by its software that runs the supply chain, and the on site teams.

(iii) For each component (eg. windows, bathrooms, walls etc), 011h has built a massively scalable platform of qualified and vetted partners across Europe that pre-manufacture and deliver according to 011h‘s prescribed design specs. The partners work into the core software stack for manufacturing lead times, quality and delivery. Everything is centralized in the stack.

(iv) Automotive OEMs benefit from massively scalable distribution channels, selling to millions of consumers. However, it remains a closed platform – “my brand, my rules”. Differently, 011h‘s platform is open to housing developers. This provides inherent scalability – every multi-family developer across Europe is becoming able to develop on top of the 011h platform, net zero, at lower cost.

These four items are what make automotive OEMs a platform. And it’s what makes 011h the equivalent in construction of homes – a truly scalable platform. But open.

011h‘s platform is open to housing developers. This provides inherent scalability – every multi-family developer across Europe is becoming able to develop on top of the 011h platform, net zero, at lower cost.

The reason why we fell in love with that model is not just the model, and the vast opportunity in a home-starved European market. It is an opportunity ripe for CO2 reduction, too.

But most importantly, we fell in love with the team.

Building a platform business is never easy. Doing it in the ops-intensive built-world, where you need really scalable supply chains, is taking the challenge up two notches. For that reason, we waited patiently to partner with an amazing team of founders who’ve “been there, done that”:

Lucas, Jota and Josep all met at Privalia, which they successfully scaled and exited for €500M a few years back.

They teamed up with Juan, who IPO’d Neinor Homes as CEO, and was previously CEO of Renta Corporacion, a major European developer.

Lucas managed to convince José to come over from his COO role at Lyst after years at Global Fashion Group

as well as Alex from Social Point and Exoticca.

The entire founding team is a Unicorn in itself – rarely seen in the wild, and insanely hard to catch.

Most importantly: instantly, we felt an insane chemistry and connection among the founders. Super well in sync in terms of vision and how to execute. Like the world’s best orchestra.

Some great things do start on social media. Grateful this happened before Elon buys the chirps.

We are uber privileged that José and team felt it worthwhile talking to us back in 2020, which culminated in us co-leading their Seed financing in December, alongside amazing co-investors Greg Dewerpe, Giuseppe Zocco, Manel Adell and many others.

Now, 1.5 years and €25M of new funding later, we get to expand this amazing platform and rockstar team into the stratosphere.

Where does 011h go from here?

Want to know Wood TF 011h stands for? Look no further: The name derives from the first 3 sequences of the Fibonacci cycle (0-1-1) while the aitch represents humans in a healthy habitat. Boom – zero eleven aitch. Easy to remember, lots to think about. And great to show up top of every alphabetical list.

The first order of business is to maximize the digital industrialization of multi-family homes in Spain. 011h has built a track record of delivering its first homes on time and below cost. It has an ambitious pipeline of several hundred of units to be constructed in 2022 alone.

With that track record, growing across Spain is a logical fast next step.

Expanding the open-ness of the platform is a major opportunity – by opening the platform to new developers and suppliers.

And who knows, maybe at that point new asset classes such as single-family homes will become net-zero and truly scalable with 011h, too. The sky will be the limit, since construction really really really needs scalable solutions to build millions of homes across Europe with net-zero emissions.