Proptech startup Social Construct is shutting down operations, The Real Deal has learned.
The construction-tech outfit, which aimed to streamline building planning and assembly with software and automation, will officially wind down in the fourth quarter, but the staff’s last day will be Aug. 1.
Co-founders Ben Huh and Michael Yarne will stay on through the end of the year “to make sure our customers will be supported,” Huh said, adding that remaining employees were given three months pay and benefits.
Social Construct is the latest real estate casualty of the pandemic and the most recent player in a crowded proptech field to call it quits. Another construction startup, Katerra, filed for bankruptcy in June and canceled its 82 projects.
About 3 out of 4 venture-backed startups in the U.S. fail, according to recent research at Harvard Business School.
“Startups are fragile beasts,” Huh said.
Launched in 2017, Social Construct aimed to solve the problem of high multifamily construction costs in cities. Huh, the CEO, chalked up the company’s failure to poor timing. The pandemic hit just as the company was getting its legs, squeezing its resources and scaring away prospective investors already worried about urban flight and crashing rents, he said.
The company raised $17 million from venture capital firms such as Y Combinator and Founders Fund, and in September 2019 broke ground on its first multifamily building, in Oakland. It planned to begin raising a Series B round in April 2020 — the month after pandemic shutdowns began.
“Had we broken ground 6 months earlier or 6 months later, we may have weathered the storm,” Huh said. “Startups require constant love and feeding even in the best of times.”
Huh, who previously was the founder and CEO of Cheezburger, said he does not currently have plans for another project, but instead will take time to recharge and regroup.
“The American Dream depends on equitable housing,” Huh said. “And we hope our experience will help others invent the future of construction.”