Very few people wake up one morning, look at their bank account, and say, “Well, I guess I’ll build an offsite factory this year.” If that were the case, we’d have hundreds of new factories opening every month and housing shortages would be a memory. Instead, most entrepreneurs eventually face the same reality. If you want to build something big in this industry, you’ll probably need someone else’s money.
That’s where venture capital comes in. And let me tell you, if you’ve never gone down that road before, it can feel a bit like inviting a very smart, very persistent stranger into your life who suddenly wants to know everything about you—your business, your childhood, your future, and how you plan to spend every dollar between now and retirement.
Many first-time founders complain about how relentless venture capitalists are during due diligence. But here’s the truth. It’s their money. If you were writing the check, you’d be just as careful.
Venture capital is private equity funding typically aimed at early-stage companies with high growth potential. While it’s often associated with tech startups, it’s increasingly being used in offsite construction, especially when the idea involves new technology, automation, robotics, or a business model that promises to scale faster than traditional construction ever could.
Let’s talk about the good, the bad, and the ugly.
The Good
Venture capital can turn an idea scribbled on a napkin into a real factory with employees, equipment, and a production schedule.
Before a factory even opens its doors, money is needed for research and development. That means prototypes, testing, engineering, and learning what doesn’t work before you build the first production line. Venture funding can carry a startup through this critical phase when there is no revenue and lots of uncertainty.
Land, buildings, and infrastructure are the next hurdle. Offsite construction is capital-intensive. Machinery, assembly lines, storage systems, cranes, software, and safety systems add up quickly. Without serious funding, most startups never get past the planning stage.
Then comes raw materials, inventory, hiring, and training. A new factory needs skilled workers, not just warm bodies. Training costs money. Retaining talent costs even more. And while all of this is happening, the factory still has to pay utilities, insurance, and overhead before the first unit ships.
Technology and automation are another big draw for venture capital. Investors love scalability. Robotics, AI, digital twins, and automation promise consistency and growth. Whether those promises are realistic is another story, but the vision can attract funding.
Marketing, distribution, and compliance are also expensive. Offsite construction is one of the most regulated sectors in the industry. Certifications, code compliance, inspections, and approvals can take time and money. Venture capital can provide the runway needed to navigate this maze.
Most importantly, venture funding allows a startup to scale faster. When demand grows, a factory can expand capacity, add shifts, or build additional facilities instead of waiting years to generate enough cash internally.
That’s the upside. It’s real. And it’s powerful.
The Bad
Now let’s talk about the part no one likes to discuss.
The biggest mistake I see is underestimating how much money is actually needed. Founders assume they can always raise more later. That assumption can become dangerous.
When cash starts running low, growth slows. Hiring freezes. Projects get delayed. Quality sometimes slips. Suddenly, leadership spends more time fundraising than running the business.
Additional funding rounds bring dilution. Founders give up more ownership, often at worse terms because investors sense the urgency. Credibility can take a hit if early projections were overly optimistic.
Cost-cutting becomes the strategy. Layoffs, reduced marketing, and paused innovation may extend the runway but can damage morale and reputation. Competitors move ahead while the company struggles to maintain momentum.
In some cases, startups become acquisition targets not because they planned to sell, but because they ran out of options.
The best defense is simple but rarely followed. Build realistic financial projections. Operate lean. Communicate openly with investors. And always, always have a contingency plan.
The Ugly
Here’s where the conversation gets uncomfortable.
Most venture capitalists do not set out to take over companies. Their goal is growth and a successful exit. But when a startup underperforms or runs out of cash, the balance of power can shift quickly.
Each funding round dilutes ownership. Board seats come with influence. Protective provisions give investors veto power over key decisions. Convertible debt can become equity. Follow-on funding often comes with new conditions.
If the company struggles, investors may push for leadership changes. A new CEO might be brought in. An acquisition may be forced. In extreme cases, liquidation becomes the only path forward.
This isn’t personal. It’s business.
And here’s the part that many founders don’t fully grasp until it’s too late. Once you take venture capital, you’re no longer the only one steering the ship. You have partners. Sometimes helpful partners. Sometimes demanding partners. Always influential partners.
The reality is that venture capital can be a powerful tool when used wisely. It can accelerate innovation, expand production, and bring much-needed capacity to an industry that desperately needs it.
But it comes with responsibility and risk. Founders must understand the terms, the expectations, and the long-term implications before signing the first agreement.
In offsite construction, where timelines are long and capital requirements are high, the difference between success and failure often comes down to how well entrepreneurs manage both the money and the relationships that come with it.
Because in this business, the money you raise can build your future. Or quietly take control of it.
Gary Fleisher—known throughout the industry as The Modcoach—has been immersed in offsite and modular construction for over three decades. Beyond writing, he advises companies across the offsite ecosystem, offering practical marketing insight and strategic guidance grounded in real-world factory, builder, and market experience.
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