A Hensel Phelps Company
A Hensel Phelps Company
One of Diverge’s prime directives is to build relationships that enable Hensel Phelps to access, aggregate and introduce our team to cutting-edge construction technologies. One of those key relationships is with KP Reddy, the founder and CEO of Shadow Ventures, a venture capital (VC) firm.
KP was born to work in the technology and construction industries. His father was a civil engineer and his mother was a computer programmer. KP started coding at age 13, but he chose to study civil engineering at Georgia Tech for his degree. “I already knew how to code, and why would I need a degree in something I already know how to do?” KP says. He practiced civil engineering in the field for four years, but ultimately his passions and interests in technologies drove him toward creating construction software solutions.
In 1997, KP was one of the first innovators to utilize the internet to create a construction project management software solution. That company grew from twelve to twelve hundred people in three years by taking advantage of KP’s relationships within the telecommunications industry. KP sold that company and then ventured into BIM as an author and adviser. He created another company that focused on BIM analytics and consulting, which he later sold. KP then helped build the Enterprise Transformation group for Gehry Technologies.
After leaving Gehry Technologies, KP ran one of the nation’s oldest incubator programs at Georgia Tech. He was fielding calls from industry partners looking to begin innovation initiatives and he began to visualize his future start-up investing efforts. He realized that the opportunities in the construction industry were ripe to fuel his passion in influencing and investing in pre-seed (incubator) and seed-level construction technology start-ups to influence the buildings all of us live with for our lifetime. “I believe that we are the best industry that literally is shaping the planet, shaping the future, and shaping communities. We have a bigger impact on humanity than any other industry. Unfortunately, somehow, we get commoditized and bid out, and go with low bid.”
KP and his partners, who all have at least 5-10 years of start-up and industry experience, established Shadow Ventures in 2018. Their goal is to offer opportunities to companies like Hensel Phelps to be involved in construction industry venture capitalism that will impact our communities and shape the future in a positive way. These opportunities provide a vehicle to impact the construction industry by gaining insights and exposure to emerging technologies. Through Shadow Ventures, companies gain opportunities to advise, influence and invest in pre-seed and start-up level companies. Shadow Ventures’ partner investment composition is made up of approximately 60% – 70% construction and development industry companies and 30-40% finance industry backers. KP sees this as the right mix of industry innovation; they can focus on strategic investments for improving the built environment, but with behavioral and financial oversight ensuring accountability and the highest possible level of return and success.
While KP and Shadow Ventures invest in companies they affectionately call Founders, they like to let their Founders shine while they remain in the shadows, as the Shadow Ventures namesake suggests. KP enjoys speaking at conferences as an expert in construction technologies, but he prefers to put Shadow Ventures’ Founder companies and solutions in the spotlight. He is more interested in making connections and introductions for the Founders than promoting Shadow Ventures itself. “I want to put the start-ups on a pedestal,” KP explains.
As part of their philosophy, Shadow Ventures not only promotes start-up companies, but places significant intellectual capital into incubator relationships. These advisory and relationship roles assist Shadow Venture in guiding industry-generated ideas and innovations towards next steps prior to being ready for investment capital. Sometimes these relationships can last for years. When KP and Shadow Ventures engage with a start-up in this way, they are analyzing the effectiveness of the technology, the investment worthiness of the technology, and most importantly, according to KP, the coachability of the people to make changes, react to pressures and listen to advice. “The incubator is a great opportunity for us to get to know people, understand what their strengths and weakness are, and get insights into a future investment.”
Shadow Ventures’ success with the incubator and start-up seed investment companies is further exemplified in their generational philosophy and practice. Many Founders that have gone through Shadow Ventures’ incubator program then partner with Shadow Ventures to pursue their next opportunity or invest in other Founder’s solutions themselves. The program promotes an environment where the Founders root for each other’s success. KP establishes strong relationships with the Founders, enabling Shadow Ventures to bring them back again and again to chase opportunities. While Shadow Ventures receives more than 50 cold applications each week, many of their next investment opportunities and those they pursue actually come from Founder referrals.
These relationships, as well as Shadow Ventures’ understanding of Hensel Phelps’ pragmatic and deliberate approach to investing in technology, has developed into our financial partnership into Shadow Ventures and several of the Founders they represent. It was obvious to Shadow Ventures that Hensel Phelps had been incubating the idea of investing in a VC firm for some time, but were looking for the right opportunity. KP and Shadow Ventures is providing the balanced people, process and technology approach that will continue to make Hensel Phelps the leader in innovation and construction technologies.