Transcription

• Speaker #0

  is in full swing. New standards, use of materials, energy consumption are our stakes. My name is Richard Mita, I am a serial entrepreneur and CEO of Sinax. At Sinax, we digitize the construction materials industry. My passion, digital applied to to sectors that did not expect it. In Les bâtisseurs, I interview visionaries in the industry to inspire you in your own environmental, digital and managerial transformation. Welcome to Les bâtisseurs, the podcast of those who build today for tomorrow. Welcome to this new episode of The Builders. I'm here today with Miguel Caralan, Investment Advisor at Cemex Ventures. It's an episode that I'm going to do in English. So now I'm going to say hi to Miguel. Hi Miguel.

• Speaker #1

  Hello and good afternoon.

• Speaker #0

  So we are hosting this particular episode in the Built Worlds Summit in Paris. And we do that with Contech, Contech France, that is partnering with this special episode with Miguel. And we're going to have a couple of episodes like this. First of all, Miguel, I'm very happy to have you here. You're from Cemex Venture. Cemex, a huge company in our industry. And I'm sure we are all very expecting what you're going to tell us about what you guys are doing. But first of all... Can you introduce yourself?

• Speaker #1

  Yeah, great. Well, thank you very much for having me. For me, it's a pleasure participating in this type of initiative whose aim is to foster the innovation spirit in our industry. So congratulations for everything that you are doing. My personal background, well, I started in CEMEX Ventures more than three years ago. But before this, I used to work for French companies. I um I did an internship in 2014 in Natixis, an investment bank. Then I joined Amundi, which is one of the largest asset managers in the world and, well, the biggest in Europe. And I was doing support to the portfolio management and institutional sales team. Then I joined Accenture, the American consultancy group, focusing on strategy and management consulting projects. a lot of projects about innovation, digital implementation of solutions across different financial banks and financial entities. And then I went back, well I keep learning about ins and outs of investment banking, so I wanted to continue my professional development in that area. And I joined Borealis Corporate Finance, which is an investment boutique focused on the sell side and buy side advisory for mergers and acquisitions in Spain. Cross-sector, but doing a lot of things within innovation and technology things. So I started working in a project within Inditex, which is one of the largest fashion companies in Spain and worldwide. And I started looking at companies doing open innovation. So one of those great examples deploying different strategies, well, the different open innovation models that you can work with. It was CMS Ventures. and at that point I applied to the role and I started doing interviews and I started job three years ago. I'm super happy because construction industry is a very interesting space. It is the second largest industry in the world after financial services. And then we've seen the cement and concrete world. Well, I don't know if you are aware, but... Concrete is the second most used material in the world after water. So very happy to work in this space and to see all the innovation that is shaping our industry. Technology is already in the streets, fostering and changing the way we work. and we have to uh well we are the the the key and the connection between the innovation and our different business units.

• Speaker #0

  Okay, that's around CEMEX Venture, around innovation. Yeah. And then maybe just before going to CEMEX Venture, tell me maybe the one thing that you know that struck you when you entered the construction industry.

• Speaker #1

  Well, at the end, it's a very complex world because you have many different players that operate in a single project, since the material manufacturers, well, all the suppliers, architects. engineers, consultants, general contractors, contractors like sustainability consultants for lean, breed certifications and so on. So when you're coming from the outside, each project is a mess and understand the different processes and workflows to run a project since the inception, then since the initial development and design to the execution until their operation and then the commissioning. It's quite impressive to see how all the parts of the value chain cooperate. And they are doing this in such an archaic way, like very old-fashioned, very traditional way. Also, like construction methods are the same as we used to. Well, we're building the same way 100 years ago. So I think there are a lot of room for improvement in our industry.

• Speaker #0

  Definitely. I think we all agree with you on that part. but Interesting that, you know, as an outsider a couple of years ago, the first thing that struck you was really complexity. You know, how all these different stakeholders managed to work together to build a specific project.

• Speaker #1

  It's amazing. And at the end, when you see the project that it's already finished, you say, OK, it works. OK, we run out of light.

• Speaker #0

  Tell me more about Cemex Venture and what you guys do. Yeah,

• Speaker #1

  so, well, first I would like to start with Cemex. Cemex is one of the largest building materials companies in the world. We do basically cement, ready-mix concrete, aggregates, and then we have another business line called Urbanization Solutions, which are services to support the rapid growth of cities and the challenges of massive urbanization. It's a bunch of different services and businesses. But most of them are oriented to, let's say, circularity, waste, and how to reintroduce materials into the wheel again. So, FEMEX has done a lot of...

• Speaker #0

  The circular economy. Exactly. How to get, you know, whether it's... When you have concrete that you get from demolition, you put that back.

• Speaker #1

  Yeah, how to reuse that concrete. And recycling all this part. Exactly. Recycle it and reuse it for new concrete mixes, for example. Because at the end, the resources that we have are a limited amount in the world. And we are extracting a lot of limestone from different quarries, stones, gravels. And at the end, that's a limited resource. and we need to reintroduce materials that we have already used to make a better world and don't use natural resources.

• Speaker #0

  Can you share us a little bit of data around Cemex? Like, you know, number of people, like revenue, you know, from top of your mind.

• Speaker #1

  Last year reported revenue was close to 17 billion. Okay,

• Speaker #0

  okay, 17 billion, okay.

• Speaker #1

  A bit close to 2 billion.

• Speaker #0

  Okay.

• Speaker #1

  And I think globally we have between 200, 300 quarries. Globally, we have 65, 70 cement plants and a lot of concrete.

• Speaker #0

  Concrete plants, I'm sure you have thousands.

• Speaker #1

  Thousands, especially here in France.

• Speaker #0

  Yes, you're quite big in France.

• Speaker #1

  Yeah, actually for concrete, it's one of the largest. players in the industry.

• Speaker #0

  Yeah, you have Lafarge, Unibeton, Vika and you, roughly. Yeah,

• Speaker #1

  those are the big ones.

• Speaker #0

  You are part of the big four here. Exactly. And so tell me more about SemexVenture, what you guys do.

• Speaker #1

  So we were launched back in 2017 and at the beginning the mandate wasn't very clear. It was more starting collaborations with external startups, especially via investments. So we started investing in different stakeholders or areas of the construction value chain, especially with things related to logistics. But it was like a broader mandate. And during the year, we have a little bit narrow the areas where we look for opportunities. So now we have like four areas of interest or vertical. So the first one is green construction. So everything that brings sustainability to the built environment and here we have done strong efforts and investments in different decarbonization solutions for example life cycle assessment platforms and for example we are investors in Vizcap which is one of the leading LCA software for the real estate market here in France and now they're expanding to different countries across Europe. Then the second vertical is related to supply chain and logistics in the construction industry. So from marketplaces of resources, materials, equipment to procurement platforms, last mile delivery, logistics in general. Then third vertical is related to productivity. So everything that brings more efficiency or optimization to different processes in construction. Since the early design of a project regardless of the type, it can be infrastructure, residential, industrial, whatever, to the asset management or the operation of the asset. So here we have a long list of solutions ranging from planning, scheduling, design, tendering, permitting, documentation management, health and safety, which is a big topic in our industry, project tracking, endless list of solutions, and probably based on, well, we do a tracking of all the deal activity in our industry. most of the activity probably around almost 50% of the investments are going to productivity solutions and now especially pushed and driven by the AI wave that we are living. And lastly is what we call the future of construction which are new ways of building rather than traditional methods. So a lot of 3d printing, modular construction or industrialized construction, industry 4.0, robotics like breakthrough technologies in our industry in general. So it's where we allocate the rest of the solutions that we are not able to put in the other buckets.

• Speaker #0

  Okay.

• Speaker #1

  And we invest normally, well, globally, but we try to prioritize those regions where CEMEX has presence, because at the end we are strategic investors, meaning that at some point we're trying to find a collaboration with the startup that we invest in and our operations. It can be before the investment or after. And we normally invest in seed and CDSAs, so pre-early stage rounds, with solutions that have been already validated. And we have led some transactions in the past, but we prefer to follow and find a balance between financial and strategic investors to the cap table of each company, because we think that that's what brings more value to the company. because financial investors are the ones that professionalizing the company giving very good advice or access to very a network of of other investors and so on but we are the ones that can validate the technology the ones that can deploy across our operations so i think that's the perfect combination for, for success for the company.

• Speaker #0

  So Right now it's mainly investment, a bit of collaboration, meaning that you can put the technology that you invest in, or the company you invest in, you can put them in discussion with your guy.

• Speaker #1

  Exactly. We have more strategies in place at the moment. So I was telling you that, for example, for investments, we try to invest in solutions that have already some early traction and that have validated the product in the market.

• Speaker #0

  Within your group? or it can be outside of your group?

• Speaker #1

  No, it can be with other clients. But three years ago, we launched an acceleration program that's coordinated from Mexico, but it's part of our team. It's called Cemex Ventures Leaplab. And the idea is to finance small-scale pilots with solutions that are closer to our business. So solutions that tackle pain points that we have in in our day to day operations and we help them validate their solution while they're giving us a solution for our problem.

• Speaker #0

  Or improve the way we invest in terms of equity or is just like a pilot project?

• Speaker #1

  It's a pilot project. We have the right to invest in future rounds. It's not mandatory to invest, but we have that right in case the company wants to raise money. so we can convert what we paid from the pilot. But initially the idea is to solve a pain point within Cemex and if the solution works, scale it in different regions.

• Speaker #0

  So let me try to summarize a little bit. So, Cemex Ventures, created 5-7 years ago roughly, your, what we call the thesis of investment is around 4 main. field like the green construction, the supply chain, productivity, asset management and the future of construction?

• Speaker #1

  Well, asset management would be included in productivity. So it's more like four blocks.

• Speaker #0

  And then you launched a kind of accelerator like three years ago.

• Speaker #1

  And you know, eight years is a lot of time, especially when you're talking with innovation. And the way you learn is by making mistakes. a lot of mistakes, but during this time we have also found out many opportunities. There are some areas where we have some unattended opportunities, where we thought that it was convenient to deploy or develop the specific solutions. And during this time we have also developed some ventures to address specific pain points that we saw and that they were uncovered. And we have like one people in the team, especially focused on venture building. So trying to create a specific companies within Cemex where Cemex is one stakeholder, minority stakeholder, and we are partnering with entrepreneurs or other venture building companies to develop this idea, take it tested. And if in some cases We succeed and we scale it within Cemex with other clients, and that's why we call it venture building. And so far, we had six incubations in areas where we thought that there was a gap that we could address. And lastly, we have the Construction Startup Competition Program, which is our flagship program. It started nine years ago. It was only Cemex Ventures. But five years ago, great companies like Leonard or well, we have now Caterpillar, we have Disruptek by Haskell, we have Hilti, Ferrovial, Leonard, Trimble, Zaguaventures and Zangovan. So we have all partnered and we have transformed from a single competition to an innovation platform, to a community where we look for the most promising startups so that's something very big because we are fostering Innovation is not just a competition to look for the best solution. We do events during the whole year to gather people from the industry to start interesting conversations, to update about what are the priorities of the corporates who are the ones at the end deploying the technology. Yeah,

• Speaker #0

  the ones that are buying at the end.

• Speaker #1

  Exactly. We have different sessions within the partners, well, all the sponsors of the competition, to learn about our priorities.

• Speaker #0

  Tell me more about some successes, companies that you invested in, and are today some successes. If you have one or two examples to share with us.

• Speaker #1

  At this point we have a portfolio of 25 companies. We try to collaborate with most of them. Sometimes it's hard to structure proper pilots or collaborations. I would like to start with a company that we have been working with during five years. So it's CloudCycle, it's a UK-based company that they are developing a solution to track quality in concrete deliveries.

• Speaker #0

  What's the name?

• Speaker #1

  Cloud Cycle. Okay. Yeah. And well, we started with a small pilot in London in 2019, but this project didn't turn into something bigger. And it wasn't until 2022, when in the context of CEMEX Ventures Leap Lab, our acceleration program, we were able to structure a proper collaboration and a proper... pilot with our operations in London and the pilot started in a cement plant with 30 trucks. So it was to measure the quality of the concrete that we were delivering to our clients because before we knew the quality of the concrete when we were doing the loading in our batching plant, but we didn't know the quality of the concrete we were giving to the clients. And in this process and in order to cover your bag and to make sure that you meet the quality standards. You can add more cement to have a more robust mix, but that more cost for CEMEX. So, and we didn't have any traceability of those deliveries. So we started using this and we realized it was a very successful case because we were able to reduce client liabilities. We were able to reduce return concrete or out of spec concrete, which is the concrete that the client say, hey, this concrete is not matching the specifications that we shared. And this is a cost that we are taking. And that's a problem for CEMEX, problem for the client. After this pilot, the results were so amazing that we decided to deploy this solution across the entire fleet. And now it's installed in more than 230 trucks in the UK.

• Speaker #0

  Men in UK.

• Speaker #1

  Most of the fleet.

• Speaker #0

  Most of the fleet in the UK. What was so special about their solution? Can you share a bit more about what they are doing?

• Speaker #1

  Okay, yeah. So they are placing some hardware that they are developing, and they have a cloud platform where you can actually see all the parameters of the concrete that you are delivering. And in case the performance is going down, before you...

• Speaker #0

  Before you actually deliver it?

• Speaker #1

  Exactly. You can spin the drum or say the driver add more water or whatever is needed. It's a very cost efficient solution compared with their competitors because it's not something new. There are other solutions like Sidra, like the one that...

• Speaker #0

  Other solutions.

• Speaker #1

  Other solutions. But that was the one. And actually we're using those solutions in other markets. But that one, that was the solution we chose for the UK. We built the integration and we did the pilot with very positive results. So we decided to scale it. And sometimes it's not just having the best solution in the market, but choosing the one that fits your requirements. Of course. So you don't need, because many founders think, or people think that to succeed in venture capital. or as an entrepreneur you need to have a very technical background and develop the most innovative solutions, you can just replicate something that someone else is doing and doing it better.

• Speaker #0

  Are you going to put that in other countries?

• Speaker #1

  We are...

• Speaker #0

  Because in every country the concrete have different norms. I know in Belgium it's a bit different than in France. In our company, we are involved a lot in the conflict.

• Speaker #1

  We have tested it here in France, and we are in conversations with other regions in Europe. And we are trying to expand the deployment of this solution because we are happy with the results. And it's something that our operations need, and it's super cost-effective in terms of the return of the investment. 2.5 times the cost. Ah oui. Because when you take the concrete to the client and it doesn't match the specifications, you need to take this truck out of the city to a dumping site, crack the concrete, so you lose the money from the client. It's a lot that you are paying that it's not covered by the client. The truck... it's an operative that morning or for a couple of hours.

• Speaker #0

  That's what we call in France, in French, we call that a retour béton.

• Speaker #1

  A retour béton.

• Speaker #0

  A retour béton,

• Speaker #1

  it's always difficult to manage. I know béton is concrete.

• Speaker #0

  So thank you for this example. Now I'm conscious of the time that we have and I wanted to know a bit, what's your view on the future a bit of this industry? You were talking about AI just before and saying that this is an area that you look for investment. What else are you looking for? What else are you looking at? What's your thesis or your future of construction? How do you see it?

• Speaker #1

  Yeah.

• Speaker #0

  You as Cemex, of course, and maybe you as Miguel, of course. Oh,

• Speaker #1

  great, great. Okay, so well, from my point of view, as I said, there is a lot of innovation and solutions are already in the market. you just need to come closer to the corporate. Sometimes it's a tough task to establish relationship with a company like

• Speaker #0

  Cemex. It's very difficult with big companies like you guys. It's very difficult.

• Speaker #1

  But at the end, these venture units, these corporate venture capital or innovation areas in the companies, our job is to have the feet on the floor and be connected with everybody and understand what are the main trends. of the industry, what it's been developed, what it's been used by everybody in construction, and try to identify the most promising solutions for our, in my case, for Cemex. But sometimes innovation is a risk in terms of I need to find someone internally that wants to try a solution that needs to put resources, money and time. to try something so the first question is who is going to pay this the second question is the time that it's going to consume and then the third question is the the risk and then when you are talking about ai you need to open like or give data from your company so from a legal point of view this is something complex that at the end we we find a way to to overpass this this challenge And from my point of view, AI, well, it's revolutionizing the way the construction industry is working. A lot of companies are integrating new solutions based on different mathematical or AI or machine learning models. Okay. But some companies are not prepared for this. First, you need to structure your data and you need to have a clear strategy to integrate different solutions. because it's not just investing or establishing integration with one single platform. At the end it needs to be something bigger where the data can flow from one point to another and have the best insights from the information that we have because at the end the corporates we have this data so we need to clean it, structure it and then start connecting with different solutions. I think that a lot of corporates are will start working and investing in different ai functionalities or solutions that can help streamline their processes and last question um what would be your advice for you know the different

• Speaker #0

  entrepreneurs or even you know maybe some um you know semex employees that want to go and propose something to semex venture what would be your advice to them

• Speaker #1

  Well, for Cemex employees, we are looking to have a better engagement with our competition program so we want to invite people at Cemex to be part of the analysis or evaluation team to select the solutions that they think are relevant for the company. So that's one point. And the first question was...

• Speaker #0

  For the entrepreneurs that want to come to CEMEX Venture, what's the advice you would give to them? With internet it's pretty easy. You can send me a message directly through LinkedIn or we organize, we are super active in different events in all the geographies in the US, here in Europe. So come to talk to us. We are super open to have new conversations and know new people. For example, you and me, we met yesterday.

• Speaker #1

  Exactly.

• Speaker #0

  And you invited me to this podcast. So at the end is just forget about being shy. and take a step forward and start talking. And this is how the magic starts. And then who knows what happened. But this is a very small industry, very niche. So, and there are a lot of networking events where you can meet great people, great investors, people working corporates, other founders that can give you advices about what to do, for example. go directly to the US market. That's an advice that I hear quite frequently because it's easier to engage with investment. And yeah, that would be my advice.

• Speaker #1

  If you're interested in connecting with CEMEX Ventures, you go and send a message to Miguel directly on LinkedIn.

• Speaker #0

  My email address is miguel.carralon at cemexventures.com. Carralon is C-A-R-R-A-L-O-N-E-X-V-E-N-T-U-R. A-L-O-N or just reach out directly through LinkedIn. Well, thank you very much for having me and it's a pleasure collaborating with this type of initiatives and I wish you all the best.

• Speaker #1

  Thank you very much, Miguel, and thank you for your time on Les Bâtisseurs. Merci and thank you for listening up to this stage and I hope that you This episode will create some curiosity for and to learn more about what CEMEX Venture is doing. So do not hesitate. Reach out to Miguel and thank you very much for listening up to this point. Miguel, thank you and see you soon.

• Speaker #0

  Real pleasure.

• Speaker #2

  Merci d'avoir écouté cet épisode jusqu'au bout. If you liked it, don't forget to rate it and comment on Apple Podcasts or Spotify and talk about it around you. This is what helps me to make it known and motivate new guests to share their vision. And to continue this conversation, find me on LinkedIn.