SFV’s Investment in Modulous
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Last year we co-led the Series A of Modulous, a company re-imagining modular housing by combining modular kits-of-parts with generative design software. This connection between the physical and digital world allows generative design to move from the abstract into reality — rapidly producing viable, costed building designs, down to the individual components.
By Conan Lauterpacht and Cal Stock
Housing — a social and climate problem
Housing is a huge social and climate issue that requires urgent action, not only because of the housing shortage but also due to the need for sustainable buildings.
Across the globe, millions of housing units are needed to meet demand whilst construction labour is scarce. In the UK alone there is a projected 217,000 shortfall in workers by 2025. The British government has also continually failed to hit their new housing target — with a 22% shortfall in 2021. The US has not fared any better, with a 5m home shortage and 88% of American contractors reporting difficulty in finding skilled workers.
Housing must also now address its impact on the environment. Landlords, tenants and regulators are now demanding sustainable housing solutions that reduce carbon footprints of buildings during construction and operation. This is no easy task, but it has never been more necessary.
Re-imagining modular housing
Prefabricated housing is not a new concept — it has been widely used in the UK since the 1930s as an efficient and cost-effective way to provide basic shelter, often with unimaginative designs and substandard builds.
Today modular housing offers an opportunity to build modern and efficient buildings while also delivering on its promise of cost, time, risk and quality benefits.
The challenge is scaling modular housing
Modular housing has historically been a challenging business to scale — driven by high capital needs, business model limitations and… building things in the physical world is hard!
1. Capital requirements: Manufacturing facilities require significant CAPEX and working capital. Due to underutilised facilities, initial projects are delivered with negative gross margins, requiring further capital, as they are not cost competitive with traditional construction without significant scale.
2. Operations complexity: Manufacturing processes combine hundreds of components. Slow processes can exacerbate working capital problems as excess stock needs to be built prior to site installation.
3. Delivery logistics: The transportation cost and logistical challenge of putting an assembled (volumetric) modular unit on the back of a truck limits the geographic area a single manufacturing site can service, slowing the journey to at-scale facilities.
This has ultimately resulted in capital constrained, sub-scale manufacturing facilities that struggle to compete on a cost basis versus traditional construction methods.
Introducing Modulous
Modulous is a modular housing platform that is enabling a new approach to modular housing.
Modular construction, without the factory
Modulous works with supply chain partners to manufacture sub-assemblies from its proprietary kit-of-parts and then locally assembles these into homes at a location close to or at the construction site. This removes the need for a manufacturing facility and allows it to service customers across multiple markets. Modulous is already assessing projects in the UK, US and Canada.
Better yet, this model also reduces costs. Modulous’ product is currently cost competitive with traditional construction and will only get cheaper as they scale. This is no small feat considering typical modular construction companies are typically subsidising projects by up to 30% in their early years.
The future of generative design
TESSA is Modulous’ own generative design tool. TESSA allows developers to input their design brief (location, footprint, floors, unit mix, etc.) and the software will automatically generate viable designs, feasibility studies and detailed costings — all based on Modulous’ kit-of-parts.
This combination of generative design tied to a kit-of-parts is game changing. All the generated designs are off-the-shelf deliverable using the Modulous system and accurately costed based on current supply-chain prices. This connection between the physical and digital world allows generative design to move from the abstract into reality — producing viable, costed building designs, down to the individual components.
From a developer’s perspective, TESSA reduces weeks of work into minutes and transforms how they can run their business. They can now assess more investment opportunities than ever, with greater confidence around costs and investment returns.
Getting to net-zero housing
Modulous’ buildings are also best-in-class when it comes to sustainable housing. Its buildings currently meet or exceed the 2025 RIBA targets for embodied carbon and building performance, but it is not stopping there. Modulous ultimate aims is to achieve zero embodied carbon buildings with net-zero operations.
Modulous has also built with circularity in mind — each component has a material passport that details how each piece can be reused for other applications and recycled accordingly. This results in its current cradle-to-cradle embodied carbon being 51% less than traditional construction today.
Experienced, disruptive team
The modular construction space has seen its fair share of failures. Building a modular construction company is complex and gaining trust of customers that you can deliver on the projects is paramount.
To tackle this problem, the Modulous team, led by CEO Chris Bone, bring a combination of domain expertise with deep experience across software, engineering, architecture and construction.
Our investment into Modulous
We’re thrilled to have co-led Modulous’ £10M Series A. The team brings a unique vision of the future of housing, combined with deep expertise across technology, architecture and construction.
We see Modulous as a game changing solution, with the potential to make real progress in sustainably solving the global housing crisis.
