In construction business, time is money.
But with so many moving parts, it can be extremely difficult for construction companies to manage the administrative aspects of their finances.
Adaptive, an 11-month-old startup that set out to give construction crews the best tools to manage their back offices, raised $6.5 million in a seed round led by Andreessen Horowitz (a16z). This adds to the $750,000 the company raised in pre-funding last August.
Notably, the founders and CEOs of companies like Airbase, Brex and Ramp, which ironically compete with each other, are also investing in the round along with 3KVC, BoxGroup, Exponent and Definition. Also among Adaptive supporters is an unnamed construction accounting firm with 100 clients nationwide.
Adaptive’s offering is geared towards general contractors, not giants – think more about SMBs, many of which may not have the resources to hire accounting staff. It builds on the premise that the current methods for GCs to stay on top of costs are “time-consuming, error-prone, and give very limited visibility into project performance”, which can cause disputes between parties. There are many transactions going on in any given project, and each requires several steps to be approved and agreed upon.
“I’d say the main difference between the status quo process and what we’re working on is that we’re taking a very focused approach to automating workflows and aligning with our software,” said the co-founder and CEO. Matthew Calvano in an interview with TechCrunch. “This gives contractors more information, as well as fewer payment delays.”
For example, he said invoices that arrive at the office by mail or email are processed through a “special offline process” that may involve a combination of Excel, email, legacy accounting software and shared files.
Co-founder and CTO Henry Bradlow previously wrote algorithms for launching rocket ships at SpaceX, so the trio are Calvano, Francisco Henriquez and Bradlow were determined to find a way artificial intelligence could make the job of the construction back office easier.
According to the co-founder, with the help of Adaptive Francisco Enriquez in an interviewGCs can take a photo of the invoice and send it to the software, which then uses OCR (optical character recognition) to read the invoice “to a fairly high degree of accuracy”, extract the cost code and task associated with the invoice, and begin routing the approval process through the office.
“It’s a combination of using machine learning for invoice reading and collaboration to automate many of the approval workflows,” Enriquez added. “And then, of course, in the end we will let them pay.”
Simply put, Adaptive’s goal is to automate cost management and thus save its customers time and money by providing real-time reporting and insights. In other words, he wants to take over the entire financial administration of construction for small GCs. In the long term, the startup has even more ambitious plans.
“In the not-too-distant future, we will be the one-stop shop for all financial workflows and products in the industry, from sourcing to buying insurance to banking and working capital,” the company said in a blog post announcing the raise. .
Interestingly, like many startups, Adaptive was born out of the fact that its founders were trying to solve a different problem.
trio worked with several home builders in Austin, Texas who were in the process of acquiring land or lots for another product. Through this experience, the developers directed them to what was more painful for them: bookkeeping.
“We started charging people monthly to manage their books in the back office and got trained on QuickBooks to just manage day to day activities,” Calvano said.
Today, he says that Adaptive is “working closely” with the numerous customers who are “actively” using his product and plans to release it later this year.
A16z general partner David Haber told TechCrunch via email that the firm “has spent a lot of time at the interface between construction software and fintech” and was “uniquely impressed the Adaptive team and the hard-earned product and distribution ideas they developed.”
In particular, he praised the team for running the accounting department in white gloves for months before founding the company.
“This gave them a deep understanding of general contractor workflows and helped tailor their product to the unique needs and requirements of the industry,” added Haber. “We also love it when founders have a unique understanding of distribution, and it was clear that the Adaptive team had thought very carefully about their GTM (go to market) approach and had already established strong relationships with key industry groups and service providers.”
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Credit: techcrunch.com /