In construction business, time is money.
But with so many moving parts, it can be a huge challenge for construction companies to manage the administrative aspects of their finances.
Custom, an 11-month-old startup looking to give construction teams better tools to manage their back offices, has raised $6.5 million in a seed round led by Andreessen Horowitz (a16z). This is in addition to the $750,000 the company raised in pre-seed financing last August.
Notably, founders and executives of companies like Airbase, Brex and Ramp – all of which ironically all compete with each other – are also pouring money around, along with 3KVC, BoxGroup, Exponent and Definition. Among Adaptive’s donors is an unnamed build accounting firm with 100 clients across the country.
Adaptive’s offerings are aimed at general contractors, but not large ones – think more SMBs, many of which may not have the resources to hire accounting personnel. It’s based on the assumption that current methods for GCs to control spending “are time-consuming, error-prone and provide very limited insight into project performance,” which can cause disputes between parties. There are many transactions in a given project, and each requires multiple approval and reconciliation steps.
“I would say the main difference between the status quo process and what we are working on is that we take a very focused approach to automating the workflows and alignment with our software,” said co-founder and CEO Matthew Calvano in an interview with businesskinda.com. “That gives contractors more visibility, and also fewer delays in payment terms.”
He said, for example, that invoices that arrive at an office through the mail or email are processed through an “offline ad hoc process” that can be a combination of Excel, email, legacy accounting software and shared files.
Co-founder and CTO Henry Bradlow had previously written algorithms to power rocket ships at SpaceX, so the trio -Calvano, Francisco Enriquez and Bradlow – was determined to find a way for artificial intelligence to streamline the construction back office.
By using Adaptive, said co-founder Francisco Enriquez in an interviewGCs can take a picture of an invoice and send it to the software, which then uses OCR (optical character recognition) to read the invoice “with fairly high accuracy”, extract the charge code and the task associated with the invoice and begin to direct the approval process through an office.
“It’s a combination of using machine learning to read the invoice and collaboration to automate much of the approval workflows,” adds Enriquez. “And then, of course, we make them pay at the end.”
Simply put, the goal of Adaptive is to automate spend management to save its customers time and money while delivering real-time reporting and insights. In other words, it wants to take care of all construction financial administration for smaller 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 supplier outsourcing to buying insurance to banking and working capital,” the company said in a blog post. announcing the increase. †
Interestingly, as many startups are, Adaptive was born from the founders trying to solve a different problem.
the threesome worked with a series of homebuilders in Austin, Texas, who were in the process of acquiring land or lots for another product. Through that experience, the developers led them to what was more of a pain point for them: accounting.
“We started charging people monthly for managing their books in the back office and were trained in QuickBooks to manage day-to-day business,” Calvano said.
Today, he says Adaptive is “working closely” with numerous customers who “actively” use its product, and is aiming for a wide release later this year.
A16z general partner David Haber told businesskinda.com via email that: the company has “spent a lot of time at the intersection of construction software and fintech” and was “uniquely impressed with the Adaptive team and the hard-earned product and distribution insights they had developed.”
He particularly praised the months the team spent running a white-gloved accounting service before launching 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 distribution insight and it was clear that the Adaptive team had been very thoughtful about their GTM (go-to-market) approach and had already developed strong relationships with key industry groups and service providers.”
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Janice has been with businesskinda for 5 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider businesskinda team, Janice seeks to understand an audience before creating memorable, persuasive copy.