'This sector’s holy grail' – the impact niche contech investors are betting on

The built environment ranks among the world's worst climate offenders, with the construction and real estate sector accounting for 35% of global emissions.

At Impact Loop's investor meetup in Stockholm on Thursday, the theme was water tech, property, energy and "contech" (construction tech). We brought together a panel of investors from three of Sweden's VCs investing in this space: Anna Ljungdahl at major VC Industrifonden, Johan Wiksell at the venture arm of construction and residential development company JM, and Johan Frenckner, partner and CEO at the VC firm Longrun Capital, to discuss where they see the greatest potential for transformation.

All three emphasised the same point: they're looking for solutions that don’t just tweak at the edges but fundamentally reshape how the industry operates.

Chaired by Impact Loop's founder, Camilla Bergman, the discussion focused on three particularly promising areas:

1. Circular and next-generation materials – the sector's "holy grail"

When asked to identify the single area with the biggest decarbonisation impact, the panel was unanimous: materials. They account for roughly 80% of construction-related emissions – by far the toughest challenge to tackle.

"Reusing building materials at scale and creating circular waste streams that become new materials – there’s enormous potential there," Anna Ljungdahl at Industrifonden said during the panel discussion.

Longrun Capital's Johan Frenckner is actively seeking material technologies that can scale dramatically.

"We want to see more companies in niches like aluminium, glass and plasterboard," he said.

2. Energy storage and the emergence of the "active" building

The second major shift, according to the panel, centres on how buildings generate, store and consume energy.

Frenckner highlighted energy storage as particularly ripe for innovation. As regulations increasingly require property owners to install solar panels, there's growing incentive to pair them with on-site storage – enabling landlords to use their own power when needed rather than exporting it to the grid.

"We’re looking closely at energy storage. A huge amount is needed to balance the electricity grid, and it will enable more solar and wind," he said.

Ljungdahl added that active buildings aren't solely about electricity: water recycling is rapidly becoming critical – and potentially more expensive – as a global resource.

3. AI for design and industrial-scale optimisation

AI is advancing quickly, and investor expectations are keeping pace. Simple digital tools for document management or task tracking barely scratch the surface in terms of genuine impact, said JM's Johan Wiksell.

What investors want now is AI that truly reshapes workflows.

"There’s enormous potential in the design phase – technical solutions that allow you to maximise living space while using as little material as possible, for example. That leads to both lower costs and lower carbon emissions," said Johan Wicksell.

For Anna Ljungdahl, AI is now a "hygiene factor."

"If you’re a company today, you have to have AI integrated. The business case doesn’t need to be AI-based, but the technology has to be there," she said.