Autodesk acquires PlanGrid in 875$ Million
Construction and engineering giant, Autodesk, Inc. (NASDAQ: ADSK) has announced acquisition of construction productivity software startup – Plan Grid for $875 million. The creator of the ubiquitous AutoCAD is a $27 billion behemoth and this huge acquisition amount is a big victory for the engineering startup space. But why is the company so much to acquire a startup in the first place?
PlanGrid is former Google venture (GV) started in 2012 by Tracy Young and funded by Sequoia capital. She underlined the success of the focus of the company to increase productivity for construction workers. The company’s foremost achievement has been to transfer the process of construction into digital workflows with centralized data. The simplicity of the collaboration tool allows information and scheduling to be streamlined. Ms. Young identified the collaboration of AutoCAD (connecting design with construction) with PlanGrid as a winning formula.
The Software Advantage
As Autodesk CEO Andrew Antagonist explained in his press meet, “As designing and making converge, Autodesk is connecting project data from design through construction and putting predictive insights into the hands of contractors.” He reiterated the need to streamline the construction methods with a comprehensive cloud-based platform. Autodesk saw this ready-made solution in PlanGrid that allowed contractors, sub-contractors, heavy civil, and other stakeholders to be on the same page with regards to the project life cycle.
The company identified real-time collaboration between the on-site work and office work. This reduces time for upload and download of time during the construction day and allow changes in project plans, projects tasks, daily file reports progress photos, punch lists and other various activities to be galvanized.
Autodesk will enhance its product offering from being a design aid to support general contractors, and other stakeholders. The workflow integration between Plan Grid’s software and Autodesk Revit along with Autodesk BIM 360 (construction management platform from Autodesk) will widen the partner integration ecosystem.
All formidable methods to gain new clients and increase wallet size from existing ones for Autodesk.
Increase in Revenues
The deal will close within the fourth quarter of Autodesk of 2019 financial year, ending January, 2019. Autodesk has not exactly disclosed the impact on its top-line including this acquisition but for fiscal year 2020 the company expects to see a contribution of $100 million with average rate of return.
The San Rafael, California based Autodesk went public in 1982 and went public three years later and has acquired 67 companies so far in its history. While Plan Grid is a comparative minion startup having raised $69.1 million over three funding rounds, last being $50 million in its Series B in September, 2017, the synergies lay for both the companies to be extracted.
PlanGrid was definitely a name to reckon with in the startup space with Y Combinator, 500 Startups, Reddit co-founder Alexis Ohanian, Founders Fund, Sequoia Capital, and Northgate Capital as its investors.
Positive for the Industry
With $1,231 billion expenditure in the U.S, the construction business is the largest in the world. After stalling of various projects post the aftermath of 2008 recession, projects have resumed and the residential market is booming again.