Menlo Park-based Katerra, a modular prefabrication startup and timber innovator, is reportedly shutting down. Katerra, founded in 2015, had raised about $2 billion from investors including SoftBank Group Corp. At one point, it was valued at $4 billion.
The startup had promised to shake up the construction industry with its efficient factories, prefab parts and modular construction units. The company has said it was working in countries including the U.S., India and Saudi Arabia. In February of last year, Katerra’s marketing materials touted 8,000 employees across the globe.
With major cash infusions from SoftBank and others, Katerra grew quickly, in part by acquiring smaller construction companies. But integrating those businesses proved difficult, and the company was forced to deal with construction delays and issues in trying to perfect its modules.
According to reports, Katerra’s shuttering is indeed a result of the pandemic; the closure of construction sites, combined with rising material and labor costs, drove the company even deeper into the red.
But Katerra had issues prior to the pandemic. Its record of delivering on its projects was patchy, and the company struggled with delays and cost overruns. Though it had previously employed around 8,000 people, it laid off hundreds of employees last year.
At the start of 2018, Katerra merged with KEF Infra, an Indian company using automated construction to bring building costs down. More importantly, the move helped Katerra gain a foothold in India and the Middle East.