Cameron Lamming, an executive at property developer RAR Hospitality, knew he was taking a risk when he hired Katerra, a construction startup without much of a track record, to design and build a new hotel in San Diego. But Katerra had recently raised nearly $1 billion from SoftBank’s Vision Fund, and the startup estimated it could build RAR’s latest project in half the time as other construction firms—and for 5% less. “Given how much money they raised, I wanted to make this bet on them,” Lamming said. 

This spring, Katerra pulled out of the deal after finding costs were rising and the construction timeline dragging on, leaving RAR scrambling to find a new general contractor. “It’s a good pitch. They didn’t deliver on any of it,” Lamming said. “It was a nightmare.”