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S3 Ventures, Altos Ventures, Operating Venture Capital, and Darren Bechtel of Brick & Mortar Ventures also participated in the financing, which brings the New Orleans-based company’s total raised since it was founded in 2008 to $47 million. (Levelset ranks among the most-funded startups in Louisiana today, according to Crunchbase data.)
CEO Scott Wolfe founded Levelset after Hurricane Katrina hit New Orleans in 2005, and his family was working in reconstruction efforts. He realized just how inefficient the payment process was and set about coming up with software to make it better. The company didn’t raise its first capital until 2015.
The platform aims to help contractors get paid faster considering that not being paid on time leads to major cash flow challenges for most. According to PWC’s working capital studies, in fact, construction industry payment speeds are the slowest of all, taking more than 83 days on average.
Levelset’s SaaS platform helps contractors, according to the company, cut that time down to an average of “low 40s” days “by making payment paperwork and compliance easier.”
But for Wolfe, it’s not enough.
“We want to make it more like one day, so that when a contractor does work, it immediately gets paid,” he told me. “The effort required to get paid and the cash stress put on contractors is unbelievable.”
For Horizon Ventures’ Bart Swanson, the appeal of Levelset goes beyond helping contractors get paid quicker. The company, he said, has built an interesting and “unique” dataset about construction payment behaviors.
Looking ahead, the company plans to use the new capital to further develop its platform, and also to hire more employees (of course). Currently, Levelset has about 200 employees spread across offices in its home base of New Orleans, Austin and Cairo, Egypt (where a lot of its engineers are based).
Levelset is used on more than 100,000 unique construction projects every month, with over $30 billion of project value active on its platform “at any given time,” according to Wolfe. In total, it has over 100,000 users and more than 2,500 subscription customers.
“We’re interacting with every major contract in the country,” Wolfe said.
We’ve written about construction tech funding plenty in the past (I previously covered commercial real estate and interviewed a number of construction companies so I get their pain points in a way that maybe other tech reporters don’t). In July, I took a look at how 2018 seemed to be a potentially “peak” year for funding in the space. That’s because 2018 saw some unusually large deals that might have skewed the numbers (including Katerra’s $865 million Series D and smart glassmaker View’s $1.1 billion Series H).
I asked our data guru, Jason Rowley, to pull some numbers and what he found at first glance may not seem like good news (because numbers are far lower than last year). But if you dig a bit deeper, it’s actually not so bad. If you remove the two large rounds mentioned above, funding in U.S.-based construction and building tech startups totaled just under $900 million in 2018. So far in 2019, funding in the sector amounts to $1.084 billion, according to Crunchbase data. While it is down compared to last year, it is up compared to years prior, as you can see in the chart below.
As I’ve noted many times in the past, the construction industry has long been, pardon the cliche, ripe for disruption while its users were slow to come around to new technologies. But that seems to be changing, and I expect we’ll only see numbers grow higher in coming years.
Illustration: Li-Anne Dias