Construction focused US fintechs CoFi and Handle raise funding
Construction technology funding reached $2.1 billion last year in the US – a 100% increase over 2020. The construction industry represents 6.3% of US GDP.
Two US fintechs / proptechs focused on the construction industry – CoFi and Handle – have raised $7 million and $10 million, respectively.
Utah-based CoFi has raised $7 million in a seed funding round, led by Blackhorn Ventures, MetaProp, and Tenacity Venture Capital.
With the new funding, CoFi says it “will help builders address the country’s housing supply crisis, first by getting projects financed faster, and second by getting subcontractors paid in as little as four days – a huge improvement from the 74 days they might have to wait without CoFi”.
CoFi was founded in 2018 by Mike Lacey and Cam Harris, who themselves were contractors and developers in the construction industry. Frustrated with the process, they launched CoFi “to turn the manual, time-intensive financing process into one that’s on-demand, fast, easy, and transparent”.
CoFi’s offering comprises the Construction Loan Marketplace and Digital Lending Platform.
“At CoFi, we go to bat for our builders and developers. We’ve seen firsthand how frustrating it can be to spend precious time and energy applying for loans and jumping through legal hoops to get our teams paid quickly,” says Lacey.
“We built CoFi into the kind of tool I wish I’d had as a builder – one where we’ve replaced sending inspectors out to a job site with tech driven remote inspections to capture project progress and allow developers to sign off on the distribution of funds.
“This flexible payment schedule wildly improves upon the industry standard of a 74-day pay cycle, and it can mean all the difference for a builder who might otherwise lose good workers because they can’t get paid quickly enough.”
The start-up “is at the junction of construction and fintech”, says founder and general partner of Tenacity, Ben Narasin.
“There’s competition in both industries, but CoFi is the only company doing both a lending marketplace and industry-specific Software-as-a-Service (SaaS) payment software.
“With billions of dollars in loans through CoFi’s platform in under a year, the opportunity is unbounded.”
California-based Handle, a software platform for construction payment compliance, has closed $10 million in Series A funding led by Energize Ventures and Ironspring Ventures.
Founded in 2018, the start-up says it will use the money to grow its support, engineering, and sales teams across the US.
Handle CEO Patrick Hogan, who grew up in a lumber business family, says his company “is solving one of the most critical and complex workflows in construction: payments.”
As one of the sectors expected to see a ripple effect as a result of the bipartisan infrastructure bill, construction currently faces dramatically rising day sales outstanding (DSOs), he explains. From 2020 to 2021, DSO’s have increased by two weeks, from 24 to 38 days.
Backed by Y Combinator, Handle already has some of the largest names in construction as customers, including CRH/Oldcastle, U.S. Concrete, and Apogee Enterprises.
It says it increased its revenue nearly 500% in the last 12 months.