Seed Round Helps Constrafor Build Out New Functionality for its End-to-end Construction Procurement Platform and Subcontractor Invoice Finance Offering
NEW YORK, NY – (June 1, 2022) – Constrafor, a SaaS construction procurement platform with embedded financing, announces its $100M+ Seed fundraise in debt and equity to build out new functionality and expand its subcontractor invoice finance offering, Early Pay Program (EPP).
With the construction industry facing massive delays caused by pandemic-related issues due to supply chains, labor shortages, and more, Constrafor is addressing a major pain point that has plagued the construction ecosystem for decades: slow payment.
The construction industry has suffered from lagging productivity because of the lack of tools that provide visibility and streamline workflows between General Contractors (GCs) and Subcontractors (Subs) at the different steps of construction procurement. This problem is compounded by the inherent delayed cash flows to Subs that leave them to finance the projects despite their precarious balance sheets and their high cost of capital.
Constrafor’s platform helps these groups collaborate through streamlined documentation and information exchange, while its embedded EPP provides financing to the thousands of contractors active on the platform that are looking to accelerate their cash flows. Through EPP, Subs can get paid for their approved invoices within 24 to 48 hours, improving cash flows by up to 80 days without having to use traditional and costly lending sources.
“Construction is facing multiple challenges from higher material costs to a looming credit crunch that will exacerbate the project delays we’re seeing across the country.” said Anwar Ghauche, founder and CEO of Constrafor. “We are proud of the positive impact we’re already having on our customers and are excited to see what these builders will achieve with our financial backing. This financing will allow us to reach more contractors as we tackle the biggest challenge in the construction industry.”
The credit facility from CoVenture comes shortly after a successful equity round led by Fintech Collective with participation from funds such as Village Global, Clocktower Technology Ventures, Commerce Venture and tech founders from Ramp, Uber, and Paxos.
“Constrafor is re-inventing the financial Operating System of construction and we see incredible growth potential,” said Brooks Gibbins, Managing Director at Fintech Collective. “Constrafor’s procurement platform coupled with its embedded financing provides a truly automated and data-driven approach to subcontractor financing. The company’s 10X+ growth over the last quarter proves the opportunity for fintech in construction is massive and untapped.”
Constrafor is in a unique position to leverage its procurement platform and proprietary data to de-risk and scale invoice financing in construction. Prior to the agreement with CoVenture, Constrafor had seen demand for invoice financing far outstrip the company’s financing potential. With the new credit warehouse, the company will scale this part of the business, making the Early Pay Program a significant contributor to Constrafor’s growth and a key driver in helping address lagging productivity in construction.
“We are excited about Constrafor’s vision and have been impressed by the robust ecosystem of construction companies that have adopted their platform and, specifically, the Early Pay Program,” said Brian Harwitt, Partner at CoVenture. “As Constrafor continues to expand its invoice financing offering, we are proud to play an instrumental role in providing the liquidity and credit know-how necessary to sustain the growth.”
As a SaaS and fintech innovator purpose-built for construction, Constrafor is setting new standards of productivity, cost-efficiency and speed, simplifying the way contractors manage essential back-office tasks and financial transactions. For general contractors, Constrafor’s robust cloud platform streamlines and expedites subcontractor procurement & administration, including contracts, COIs, invoices, payments and diversity procurement – all in one place. For subcontractors, the platform offers an Early Pay Program (EPP), a cost-effective receivables financing service that shortens the invoice payment cycle, frees up cash and allows them to take on more projects.
In addition to its core platform capabilities, Constrafor easily integrates with contractors’ existing technologies, including accounting programs, ERP systems and project management tools. Headquartered in New York City and serving customers throughout North America, Constrafor has thousands of contractors registered on its platform. For more information, please visit https://www.constrafor.com.
CoVenture is an asset management firm investing across the capital stack of tech-enabled companies, often providing the first institutional equity and/or debt financing to business operations across financial services, new forms of media, platform economies or industries we are yet to imagine. For more information visit https://coventure.vc/.
About Fintech Collective
FinTech Collective is a global venture capital firm backing entrepreneurs who are rewiring the way money moves through the world. Founded in 2012 and based in New York City, the firm has deep experience investing across capital markets, wealth management, banking, lending, payments, insurance, and DeFi. The managing partners of FinTech Collective met in their mid 20’s and helped build, scale, and successfully exit four fintech businesses. We publish a weekly newsletter, delivered every Saturday, which provides a tightly edited rundown of global fintech news, along with a bit of our original analysis (available at fintech.io/newsletter).
Read more about the fundraise in this exclusive interview with our Founder, Anwar Ghauche and Christine Hall from TechCrunch: Constrafor grabs $106M in equity, credit to finance construction subcontractors.