A Venture Capitalist’s Guidebook to Innovation

Interview by Sarah Lipsit

With innovation being our modus operandi not only for this annual journal,  but as an organization as a whole, we want to understand what this means from all perspectives. In the first pages of this issue, we asked leaders where they look to invest in innovative technologies and companies to use. But what about those eager to indulge in their own Research and Design to become the next indus.ai, Toolbx, or Ratio.City and develop the next tools and technologies? 

We took our curiosities to two Venture Capitalists, Lynette Keyowski and Alice Leung, for a conversation on how companies of any size, entrepreneurs, innovators, and idealists can begin to navigate the start-up scene of con-tech and prop-tech.  

With strategies to best utilize resources and capabilities of all kinds, implementation and interaction, and retain the enthusiasm for longevity. Read on for a guide for the curious and perplexed, the stuck and skeptical — inspiration for your next new venture may be in the following pages.


Lynette Keyowski, Managing Partner, REACH Canada

Lynette Keyowski brings over 15 years of experience in executive leadership across the North American real estate landscape. As an entrepreneurial CEO and executive professional, Lynette was instrumental in both organization and technology consolidation initiatives in the Canadian real estate sector. 

She has been a mentor for REACH since 2014; has been a strategic advisor to national and international real estate corporates; and led the Canadian expansion of the global award-winning REACH scaleup program in 2020.  In 2021, she was named a RIS Media Trailblazer for her role in the REACH global expansion.

She holds a Masters Degree in Economics, and has attained the Certified Association Executive (CAE) designation.

Alice Leung, Vice President, Platform & Product Strategy, Brick & Mortar Ventures

Alice started her career in the AECOO industry with DPR Construction in the San Francisco Bay Area building UCSF Medical Center at Mission Bay and Lucile Packard Children’s Hospital Stanford. She led the Bay Area Skunkworks group and implemented various construction technologies on project sites. In April 2016, Alice relocated to Singapore to help start up the Southeast Asia HQ for DPR Construction as the resident BIM/VDC and construction technology expert and worked on data center projects. She was part of various workgroups led by the Singapore Building and Construction Authority (BCA), was a part-time lecturer for the BCA Academy BIM Management Certification Course, taught BIM courses for RICS and spoke at various conferences in the region. She joined the Digital Built Environment Institute(DBEI) organizing committee whilst in Asia and is now part of the DBEI North America Committee since her relocation back to San Francisco. After realizing the slow pace of digitization in the construction industry, Alice joined the Brick & Mortar Ventures team to work with startups that want to disrupt the way we design, construct and maintain the built world.

Alice holds a B.S. in Electrical Engineering from Brown University where she was on the Formula SAE racecar team and worked in a materials science lab researching lead-free piezoelectrics.

How can entrepreneurs devise strategies to both make it in the market and capture the attention of investors that fit their capabilities and resources?

Lynette Keyowski: There are really three pillars that we advise entrepreneurs to focus on to ensure longevity and success in the market — and that we look for from a follow on investor perspective: 

Being really clear about and understanding when developing a product if it is a solution looking for a problem, or if there is a real problem in the marketplace looking for a viable solution.  In most instances, the latter circumstance will have a more enduring trajectory, and what most VC’s will look for.  A few suggestions: 

Have contact with the practitioner on the ground (whoever that might be: architects; builders; developers, etc) — those you are looking to solve the problem for, and will ultimately be the customer.   

Do a gut check: if you are a practitioner, is this something you truly struggle with?  This is why we love to work with practitioners who develop in the space, themselves.  They know and understand the real challenges, and are often more tuned-in with what it will take to address the challenge. 

Being part of a community — even just your local market of entrepreneurs that have some type of presence in the market you’re attacking. This is really the secret to the success of the REACH/SCV ecosystem.  Through the number of companies that we have been privileged to work with, we have created a cosmos of entrepreneurs all playing in the same space who exponentially grow through the knowledge they share, and the synergies they create. As a part of the National Association of REALTORS’ family, our companies have direct access to the market and the affiliated entities they further align with.  We are part of the fabric of this community, and as such are able to fast-track introductions through the network effect of being an integral part of that trusted and closely aligned ecosystem. On the flip-side, community serves up additional network effects, in particular on the capital side.  Through creating that sense of community, we are much more likely to take a close look at those companies that are inbound referrals from people we’ve done business with in the past.  Community builds trust, and removes challenges and barriers to market and capital.  Entrepreneurs can find community anywhere — and it’s a crucial component of success!

In terms of gaining attention, it is critically important for you and your team to be passionate about what you are building!  Every VC will have stories of great ideas that they’ve passed on because they were not confident in the team’s ability to deliver or the passion with which the founder tells the story.  Reciprocally, there are numerous examples where average ideas have come to fruition because the funders are willing to bet on the team, and the vision they have and create for their solution.  

This is all part of what we do through REACH: working with our founders to get them to a place where VC [whether it is Second Century Ventures (our venture capital arm) or other funding partners] can get really excited about the solution they are delivering, and how they are delivering it to the market.

Alice Leung: One of the most challenging aspects in building products for the construction industry is the many different personas of users. You have superintendents who prefer less buttons to BIM Managers who want every possible feature. Investors want products that can impact many different stakeholders in the supply chain. As an investor in AECO tech, I want to see early signs of low friction adoption before I invest. Startups should build easy-to-use technologies that immediately add value.

What are some common archetypes or patterns in the structure and philosophy of the startups that you invest in?

Lynette Keyowski: There are really three primary values/personas we look for in a founding team: 

Are they committed to and passionate about their solution, and do they have a clearly defined goal in mind?  Have they done their research, and do they believe that what they are building has purpose and an opportunity to enhance the ecosystem? 

Do they have a beginner’s mindset?  Whether it is a first time founder or a seasoned entrepreneur, do they listen to learn; are they open to coaching or alternative ideas; and are they willing to roll up their sleeves and dive in when presented with a different/ better way of accomplishing the goal?

Likely most importantly — are they good people?  We believe in the “rising tides raise all boats” philosophy, and strive to work with those who are equally invested in helping others become successful as much as themselves.

Alice Leung: We love founders who have been out on construction sites and understand the complexities of the construction value chain. Field conditions are so unique to our industry that we need founders to understand who they’re building technologies for intimately.

When do you know it’s the right time and structure to invest and grow value within the startup?

Lynette Keyowski: First and foremost, our investments must identify a real need or pain point in the industry, have proven that by having some type of market traction (i.e., they are being paid for their solution), and must have proven that their solution is scalable.

Beyond this basic requirement of most VCs, our unique structure — where REACH (the scale-up program) is a wholly owned entity of our venture capital arm (Second Century Ventures), which in turn is fully capitalized by the National Association of REALTORS (NAR). This truly de-risks the investment, and allows us the latitude to cutivate — and in many instances curate — the right environment for investment. The close relationship we have with the NAR provides premier access to the demographics, market intelligence and cultural dynamics of the market, from buyer to seller to the professional landscape. From this vantage point, we are in perhaps the most envious position to understand the timing of investment. Our investment diligence really occurs as we work with firms through the scale-up phase, so that deeper investment is timed when it is most impactful for market acceptance and expansion as determined by our work with NAR’s membership and the industry. We also often find ourselves in an advisory role for both our investments and others when it comes to structuring capital raises, to ensure that the right type of capital is participating in the firm’s success.

Alice Leung: As an early stage investor, we are working with many startups during their initial journey of finding product market fit and testing out their product with pilot customers. Given our team’s backgrounds and relationships with the industry, we have an understanding of whether or not specific parts of the construction value chain are interested in or are looking for specific solutions. We are able to utilize our industry knowledge to invest in the startups that are solving problems that are most in demand by the industry at that specific time. We think we can add the most value to startups at the earliest stages of their journey!

How do you address the right balance to fit the product or service to the market to ensure success in the rapidly growing industry?

Lynette Keyowski: The strength of the REACH program is really through its ability to hand curate the most knowledgeable connections, introductions and relationships between technology companies and the decision makers and influencers in the markets they are servicing. REACH’s approach to both education and mentorship is much more targeted toward our companies’ immersion into the industry (i.e., market) than many other programs. REACH companies are exposed to a deep understanding of how the real estate sector is organized, where their solutions can be tailored to be most impactful (and successful), and how to identify the most effective strategies to approach the market.  

Through our mentorship component, where we connect our companies to a pool of over 700 executives, decision makers and influencers in the space, our companies are provided a white-glove service that propels their solution into the right market, at the right time, and in the right way.

Alice Leung: Some of the best technologies and innovations fail by being too early to market. We are oftentimes looking at technology versus industry to see if the timing is right for adoption. For example, there have been a few ideas in the robotics space that were too early to the market: the cost of hardware was expensive and the technology had not matured to a point where it can handle the construction site conditions.

The CEO’s job of crafting strategies that endure is increasingly difficult. What important lessons could you share to build lasting success?

Lynette Keyowski: This really ties back to the response around capturing market and attention.  All of the same principles apply — having a solution for a real problem, embedding yourself in community, and being passionate about your solution. Where founders or startups most often fail is when any or all of these are out of balance. 

In terms of problem solving, some groups fail because they think they can “do it better” than the incumbent solution. While this might be true, unless a solution is super-unique from others, companies and practitioners are slow to change. In a saturated market this is particularly dangerous for startups, who often don’t have the stamina, capital or bandwidth to outlast the sales cycle of their target market, and still be available when their customer is ready to move.

This often leads to what we call the founder’s dilemma — founders who have blinders on with respect to how well or fast their solution is being adopted, and forget that they really got into this to make money — which is the ultimate signal to growth. Startups often neglect the startup mantra “fail fast, fire fast”; based on meaningful feedback (from customers, mentors, peers and professionals).  If things are not working — such as, you are not making money and growing — and you don’t make a change that’s required (maybe even a foundational change), you are less likely to be successful.  

Which leads to a third lesson, based on passion.  Founding CEOs are often visionaries and really drive their solution to life! This is critical in the startup and growth phase, as previously mentioned, because it’s a critically important component of attracting capital and market share.  People will invest in and buy people more than products. However, very few founders can be the founding CEO and the CEO who either scales the company, or even ultimately takes it to exit. While they have the same title, what is required in a CEO at the growth and exit phase is very different from what is required in startup mode. Knowing, understanding and accepting this out the gate makes foundational changes like this easier to make, and made sooner in many cases, based on the feedback received. 

Like most things in life, having a clear view of the objective, iterating and evolving based on feedback and measurement, and doing the right things for the right reasons will be tremendous assets to helping startups succeed long term. 

Alice Leung: One of the biggest reasons why startups fail is not understanding the customer properly. I have seen a slew of tools being built for one particular persona assuming that the product will easily get adopted by a different persona within the same type of company (i.e project manager, superintendent, BIM manager) or throughout the construction supply chain (i.e. general contractor, subcontractor). I have also seen tools being built by teams who do not have an intimate understanding of the complexities of the construction industry. Startups need to understand their customers intimately to build tools that their customers will use and become raving fans of. 

This is the challenge and beauty of the industry: people from so many different backgrounds and experiences are brought together to build a project. A successful technology or process will understand all of these different needs and can be tailored for each persona on this project.

What could the industry do to provide better support and resources for emerging ventures, and in tandem, innovation?

Lynette Keyowski: One of the biggest reasons why startups fail is not understanding the customer properly. I have seen a slew of tools being built for one particular persona assuming that the product will easily get adopted by a different persona within the same type of company (i.e project manager, superintendent, BIM manager) or throughout the construction supply chain (i.e. general contractor, subcontractor). I have also seen tools being built by teams who do not have an intimate understanding of the complexities of the construction industry. Startups need to understand their customers intimately to build tools that their customers will actually use and add value. 

This is the challenge and beauty of the industry: people from so many different backgrounds and experiences are brought together to build a project. A successful technology or process will understand all of these different needs and can be tailored for each persona on this project. 

Alice Leung: Startups are always looking for customer feedback — the good, the bad, and the ugly. This feedback is critical in making sure that the products being built for construction works.

What about a circular model of innovation; do you have any recommendations or thoughts for established companies to invest in themselves and begin research divisions?

Lynette Keyowski: We have seen this strategy work really well in some instances, though, unfortunately, in most cases we’ve seen it not work as well.  

At the end of the day, it really comes down to two things: focus and resources. Building and scaling technology, and even sourcing, vetting and performing diligence on existing solutions is really time and resource intensive.  At REACH/SCV we source hundreds of solutions each year — resolving on 8 to 10 for each program. The set of capabilities required to scale successful technology enterprises is typically very different from the infrastructure, talent and expertise of corporate firms, and not in their standard “wheelhouse”.  Understanding if investing in a VC arm or research division is simply a standalone value add to their core business, or an approach that will directly impact the success of their core focus is critical.  For a large entity contemplating scaling or investing in technology solutions exclusively for themselves or to grow their business  — and who has the capital resources and appetite for the intensity of sourcing and scaling — this approach might be successful and has been seen to work. 

One important aspect to consider is that, for the technology firm(s) being sourced for investment, this type of an approach can potentially cap their market, and so isn’t necessarily appealing. Being acquired by or taking considerable capital from a large customer could potentially create a competitive disadvantage and deter future growth, making it more difficult to find a ‘fit”. 

Alice Leung: I’m all for large companies to start research divisions and build their own product. However, there must be an end goal in mind and the understanding that what is built in-house may become obsolete. Software is easy to build, but maintaining it is hard. Many internally developed tools get replaced by outside softwares or become obsolete because of lack of care or attention. Also, the economics of building versus buying new software should be heavily considered. Maintenance and upkeep of these tools tend to be expensive and may become unaffordable (compared to technology companies’ whose sole purpose is to continuously improve on their technology with high software margins).  I have also seen large companies try to spin-out some of the internal developments to sell as a product to the rest of the market. This is difficult to do because sometimes that tool has been built for a specific workflow which is unique to a small number of companies, which makes the tool difficult to scale and capture a large customer base. As an investor, we look very closely to how applicable a certain tool is to the entire market. 

On a slightly different note, one sentiment that I’ve noticed in AECO is that companies believe data is proprietary, which may make a company hesitant to adopt new tools or share data with the technology company — leading to an internal development effort. There are some instances where it makes sense to develop internally, but in a majority of the cases, I believe people, execution and operational excellence are what sets companies apart, not technology and software. As an investor with a bigger picture view of the construction industry, I would like to see the industry collaborating around data and pain points and understand that execution is how one can win. A lot of productivity gains can be better achieved through training and upskilling, proper processes, and sharing of knowledge. I would like to see companies focus on building internal tools and processes that focus on the people and process side of things — these are the tools that may be a competitive advantage — rather than building tools around data or workflows.

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