Infratech Isn't a Hard-Hat Sector

Infratech sounds like diggers, concrete and hi-vis. The data says most of its companies, and most of its capital, are digital. We dig into who’s really building the UK’s infrastructure technology.

The headline everyone assumes: Infratech is a hard-hat sector. It’s physical, capital-heavy and slow, and it sits a long way from the software businesses venture investors know how to back.

What the data actually shows: Digital & AI is the largest sector in UK infratech, accounting for 1.14k of the 2.11k companies identified in UK Infratech: From Innovation to Scale. It’s also the highest-funded sector in every one of the three infratech verticals. In Future of Construction, the vertical you’d most expect to be about bricks and steel, digital & AI companies account for around 92% of the equity raised since 2020.

What that leaves out: hardware hasn’t gone anywhere. Energy, transport and civil engineering companies still raised hundreds of millions of pounds. The real shift is software layered onto physical assets, not software replacing them.

In our series, we’re busting the myths that come from UK business data. The headline says one thing, but does it hold up once you dig into the data? This week: is infratech really a hard-hat sector, or is it becoming one of the UK’s quieter software markets?

Where this myth comes from

The assumption isn’t unreasonable, infrastructure is physical by definition. It’s delivered through long procurement cycles, on multi-year programmes, by contractors whose balance sheets are measured in plant and people rather than code.

Investors have treated it accordingly. Many of these companies fit neither traditional venture capital nor conventional infrastructure financing. They’re too slow and procurement-bound for a typical software fund, and too early and too small for an infrastructure fund.

The sector’s own branding doesn’t help. “Infratech” gets illustrated with drones over bridges and robots on building sites. Those companies exist, but they’re not what most of the sector looks like.

There’s also a definitional problem. As the report puts it, there’s no single accepted definition of infratech. SIC codes, the default way of classifying UK companies, sort businesses by what they do, not by who they sell to. A construction software company and a groundworks contractor can end up looking nothing alike in official data, even though they serve the same customers. (We’ve written before about how to find companies when SIC codes are too broad.) 

Beauhurst’s infratech cohort was built by combining our own industry classifications, SIC codes and keyword searches, then validating the results manually. That’s what makes the sector’s digital core visible.

Most infratech companies are digital

Of the 2.11k UK infratech companies in the cohort, 1.14k are classified as digital & AI. That’s half as many again as transportation (757), nearly double energy (621), and more than five times civil engineering (213) or water (191).

These sectors overlap, because a company can belong to more than one. A business building AI-driven monitoring for water networks, for example, counts as both digital & AI and water. The figures can’t simply be added together, but the overlap is part of the story: much of infratech’s digital activity is built on top of a physical sector rather than separate from it. 

The pattern holds in innovation activity too. Digital & AI companies make up 43% of infratech companies filing patents, and energy and digital & AI together account for almost 70% of infratech university spinouts. For a broader view of where UK spinouts come from, see our spinout investment research. 

The money follows the software

Company counts could simply reflect how cheap it is to start a software business. The capital data is harder to explain away. Between 2020 and 2025, Digital & AI was the highest-funded sector in every infratech vertical, and it was involved in the most deals in each one.

The biggest single example sits in Supply Chain. In 2021, construction software developer Causeway raised £120m. That one deal accounted for most of the £166m Supply Chain raised that year, and it’s the only year in which Supply Chain outraised Greentech.

This mirrors the wider market. AI accounted for 32% of all UK equity investment in 2025, according to The Deal H1 2026, and infratech is part of that. 

This series has warned before about reading averages without medians, so the comparison that is worth looking at is typical deal size, not total capital.

A case study: Future of Construction is the most digital vertical of all

If the hard-hat myth were going to hold anywhere, it would be in construction. It’s the UK’s most physical industry, and one of its most stretched. Construction recorded more company insolvencies than any other sector in the 12 months to November 2025, with 3,973 in total.

Yet Future of Construction is the vertical where digital & AI dominates most completely: roughly £309m of the £337m raised between 2020 and 2025. Civil Engineering companies in the vertical raised £185m, so physical engineering is still well represented, but the software share is far larger.

The companies behind that figure are building things like construction management software, digital twins of assets and sites, AI-driven planning and scheduling tools, and site data platforms.

The likely explanation is that construction’s problems are mostly coordination problems: programmes, supply chains, compliance, handovers and data. Those are software-shaped problems, and software is a much cheaper way to attack them than new plant or materials. It’s also the part of construction a venture-backed company can scale without owning a single digger.

What the headline leaves out: hardware hasn’t gone anywhere

It would be easy to swap one myth for another and call infratech a software sector. That would be wrong too.

Physical sectors still attract serious capital. Energy companies within Greentech raised £382m between 2020 and 2025, not far behind Greentech’s Digital & AI total, and Energy companies in Supply Chain raised a further £196m. 

Some of 2025’s most notable regional deals were hardware-led: stratosphere platform company AALTO raised £79.2m in the South East, and LIDAR sensor developer Phlux Technology was one of two companies behind £17.2m of investment in Yorkshire and the Humber. Yet both are also tagged with Beauhurst’s IS8 digital & technologies classifier, because their hardware is only as valuable as the data and software that sit on top of it. Even infratech’s most physical deals, in other words, carry a digital layer. For more on the physical end of the market, see our top UK drone companies and top greentech companies.

Then there’s the tagging itself. A sensor company that sells a data platform alongside its hardware, or a robotics firm with its own control software, can reasonably count as both Digital & AI and a physical sector. So the most accurate version of the finding isn’t that software is replacing infrastructure hardware. It’s that almost every part of infrastructure now has a software layer, and that layer is where most of the venture capital goes.

What this means if you’re backing, building or buying infratech

For investors: if your fund filters out infratech as capital-heavy and slow, you may be screening out a software market. The better question to ask is whether a company’s route to revenue runs through infrastructure procurement, not whether it builds hardware. That’s where infratech’s real friction sits. Corporate venture arms such as Murphy Capital are betting that access to live projects shortens that route. For corporates weighing a similar model, see how Beauhurst supports corporate venturing and strategy teams.

For founders: being a software company doesn’t exempt you from infrastructure’s timelines. The report’s view is that AI’s commercial value in the sector will increasingly be judged on measurable outcomes, such as project delivery, asset performance and workflow automation, rather than technical capability alone. Position around deployment evidence, not the model.

For infrastructure clients and policymakers: if most infratech innovation is digital, then digital procurement is infrastructure policy. Technologies aimed at productivity, resilience, cost certainty and sustainability are becoming central to programme delivery rather than an add-on. Programmes such as Ofwat’s £600m Water Innovation Fund matter because sectors like Water and Civil Engineering show comparatively low patenting and spinout activity, partly because long procurement cycles make it hard for small companies to trial new technology.

For anyone writing about infratech: be specific about which infratech you mean. A headline about “Infratech investment” is, most of the time, a headline about software sold to infrastructure. That’s not the same thing as a story about construction.

The myth, busted

Infratech isn’t a hard-hat sector. Of the 2.11k UK infratech companies we identified, 1.41k are digital & AI, and digital & AI is the highest-funded sector in every vertical. That’s around 92% of equity in Future of Construction, the vertical most associated with physical work.

But the fix isn’t to rebrand infratech as software. Energy companies raised £382m within Greentech alone, most patent filers sit outside digital & AI, and many of the sector’s digital companies are also tagged with a physical sector. The accurate picture is software layered onto physical assets, and capital flowing mostly to that software layer.

Next time a headline describes infratech, the useful first question isn’t how big it is. It’s what the sector’s companies actually build, and whether the categories behind the number overlap.

See past the headline yourself

No single classification could show this picture. SIC codes alone would scatter infratech across construction, software, engineering and utilities, and would miss the overlap between them. Surfacing the sector’s digital core took company-level tagging across sectors and verticals, validated by hand, and linked to deal-by-deal investment, grant, patent and spinout records.

That’s the level Beauhurst data operates at. Whether you’re defining an emerging sector, sizing a market that official data doesn’t recognise, or building a thesis around an industry that sits between categories, that’s the difference between quoting a headline and understanding what’s behind it.

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