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Tiger Global leads $30M investment into Briq, a fintech for the construction industry
Briq, which has developed a fintech platform used by the construction industry, has raised $30 million in a Series B funding round led by Tiger Global Management.
The financing is among the largest Series B fundraises by a construction software startup, according to the company, and brings Briq’s total raised to $43 million since its January 2018 inception. Existing backers Eniac Ventures and Blackhorn Ventures also participated in the round.
Briq CEO and co-founder Bassem Hamdy is a former executive at construction tech giant Procore (which recently went public and has a market cap of $10.4 billion) and Canadian software giant CMiC. Wall Street veteran Ron Goldshmidt is co-founder and COO.
Briq describes its offering as a financial planning and workflow automation platform that “drastically reduces” the time to run critical financial processes, while increasing the accuracy of forecasts and financial plans.
Briq has developed a toolbox of proprietary technology that it says allows it to extract and manipulate financial data without the use of APIs. It also has developed construction-specific data models that allows it to build out projections and create models of how much a project might cost, and how much could conceivably be made. Currently, Briq manages or forecasts about $30 billion in construction volume.
Specifically, Briq has two main offerings: Briq’s Corporate Performance Management (CPM) platform, which models financial outcomes at the project and corporate level, and BriqCash, a construction-specific banking platform for managing invoices and payments.
Put simply, Briq aims to allow contractors “to go from plan to pay” in one platform with the goal of solving the age-old problem of construction projects (very often) going over budget. Its longer-term, ambitious mission is to “manage 80% of the money workflows in construction within 10 years.”
The company’s strategy, so far, seems to be working.
From January 2020 to today, ARR has climbed by 200%, according to Hamdy. Briq currently has about 100 employees, compared to 35 a year ago.
Briq has 150 customers, and serves general and specialty contractors from $10 million to $1 billion in revenue. They include Cafco Construction Management, WestCor Companies and Choate Construction and Harper Construction. The company is currently focused on contractors in North America but does have long-term plans to address larger international markets, Hamdy told TechCrunch.
Some context
Hamdy came up with the idea for Santa Barbara, California-based Briq after realizing the vast amount of inefficiencies on the financial side of the construction industry. His goal was to do for construction financials what Procore did to document management, and PlanGrid to construction drawing. He started Briq with his own cash, amassed through secondary sales as Procore climbed the ranks of startups to become a construction industry unicorn.
Briq CEO and co-founder Bassem Hamdy. Image Credits: Briq
“I wanted to figure out how to bring the best of fintech into a construction industry that really guesses every month what the financial outcomes are for projects,” Hamdy told me at the time of the company’s last raise — a $10 million Series A led by Blackhorn Ventures announced in May of 2020. “Getting a handle on financial outcomes is really hard. The vast majority of the time, the forecasted cost to completion is plain wrong. By a lot.”
In fact, according to McKinsey, an astounding 80% of projects run over budget, resulting in significant waste and profit loss.
So at the end of a project, contractors often find themselves having doled out more money and resources than originally planned. This can lead to negative cash flow and profit loss. Briq’s platform aims to help contractors identify outliers, and which projects are more at risk.
Throughout the COVID-19 pandemic, Briq has proven to be “extremely valuable” to contractors, Hamdy said.
“In an industry where margins are so thin, we have given contractors the ability to truly understand where they stand on cash, profit and labor,” he added.
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Polytomic announces $2.4M seed to move business data where it’s needed
There is so much data sitting inside companies these days, but getting data to the people who need it most remains a daunting challenge. Polytomic, a graduate of the Y Combinator Winter 2020 cohort set out to solve that problem, and today the startup announced a $2.4 million seed.
Caffeinated Capital led the round with help from Bow Capital and a number of individual investors including the founders of PlanGrid, Tracy Young and Ralph Gootee, the company where Polytomic founders CEO Ghalib Suleiman and CTO Nathan Yergler both previously worked.
“We synch internal data to business systems. You can imagine your sales team living in Salesforce and would like to see who’s using your product from your customer data that lives in other internal databases. We have a no-code web app that moves internal data to the business systems of the office,” Suleiman told me.
Data lives in silos across every company, and Polytomic lets you build the connectors by dragging and dropping components in the Polytomic interface. This new data then shows up as additional fields in the target application. So you might have a usage percentage field added to Salesforce automatically if you were connecting to customer usage data.
The company actually sells the product to business operations teams, who would be charged with setting up a catalogue or menu of data sources that live in Polytomic. This is usually handled by someone like a business analyst who can configure the different sources. Once that’s done, anyone can build connectors to these data sources by selecting them from the menu and then choosing where to deliver the data.
The founders came up with the idea for the company because when they were at PlanGrid, they faced a problem getting data to the people who needed it in the company. The problem became more pronounced as the company grew and they had ever more data and more employees who needed access to it.
They left PlanGrid in 2018 and launched Polytomic a year later to begin attacking the problem. The two founders joined YC as a way to learn to refine the product, and were still working on it on Demo Day, delivering their presentation off the record because they weren’t quite done with it yet.
They released the first iteration of the product last September and report some progress getting customers and gaining revenue. Early customers include Brex, ShipBob, Sourcegraph and Vanta.
The company has no additional employees beyond the two founders as of yet, but with the seed funding in the bank, they plan to begin hiring a few people this year.
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Selling a startup can come with an emotional cost
Every founder dreams of building a substantial company. For those who make it through the myriad challenges, it typically results in an exit. If it’s through an acquisition, that can mean cashing in your equity, paying back investors and rewarding long-time employees, but it also usually results in a loss of power and a substantially reduced role.
Some founders hang around for a while before leaving after an agreed-upon time period, while others depart right away because there is simply no role left for them. However it plays out, being acquired can be an emotional shock: The company you spent years building is no longer under your control,
We spoke to a couple of startup founders who went through this experience to learn what the acquisition process was like, and how it feels to give up something after pouring your heart and soul into building it.
Knowing when it’s time to sell
There has to be some impetus to think about selling: Perhaps you’ve reached a point where growth stalls, or where you need to raise a substantial amount of cash to take you to the next level.
For Tracy Young, co-founder and former CEO at PlanGrid, the forcing event was reaching a point where she needed to raise funds to continue.
After growing a company that helped digitize building plans into a $100 million business, Young ended up selling it to Autodesk for $875 million in 2018. It was a substantial exit, but Young said it was more of a practical matter because the path to further growth was going to be an arduous one.
“When we got the offer from Autodesk, literally we would have had to execute flawlessly and the world had to stay good for the next three years for us to have the same outcome,” she said at a panel on exiting at TechCrunch Disrupt last week.
“As CEO, [my] job is to choose the best path forward for all stakeholders of the company — for our investors, for our team members, for our customers — and that was the path we chose.”
For Rami Essaid, who founded bot mitigation platform Distil Networks in 2011, slowing growth encouraged him to consider an exit. The company had reached around $25 million run rate, but a lack of momentum meant that shifting to a broader product portfolio would have been too heavy a lift.
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Hear Cloudflare and PlanGrid’s amazing journey from founding to exit at Disrupt 2020
How and when should startup founders think about the “exit”? It’s the perennial question in tech entrepreneurialism, but the hows and whens are questions to which there are a multitude of answers. For one thing, new founders often forget that the terms of the exit may not eventually be entirely in their control. There’s the board to think of, the strategic direction of the company, the first-in investors, the last-in. You name it. We’ll be chatting about this at Disrupt 2020.
Exits normally happen in only one of two ways: Either the startup gets acquired for enough money to give the investors a return or it grows big enough to list on the public markets. And it just so happens we have two perfect founders who will be able to unpack their own journeys on those two roads.
When Cloudflare went public last year it certainly wasn’t the end of its 10-year journey, and nor was it PlanGrid’s when it was acquired by Autodesk in 2018.
Cloudflare’s Michelle Zatlyn saw every nook and cranny of the company’s journey toward its IPO, which received a warm reception, even if there were a few bumps along the road leading up to it. What comes after an IPO and how do you even get there in the first place? Zatlyn will be laying it all out for us.
PlanGrid’s journey to acquisition by Autodesk was equally fascinating, and Tracy Young — who, as CEO and co-founder, shepherded the company to an $875 million exit — will be able to give us insight into what it’s like to dance with a potential acquirer, go through that (often fraught) process and come out the other side.
We’re excited to host this conversation at Disrupt 2020 and expect it to fill up quickly. Grab your pass before this Friday to save up to $300 on this session and more.
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YC-backed Tango Builder wants to use aerospace engineering to build a house
Housing has been constructed for millennia, and while clearly our modern abodes are ever so slightly better than the elk tents we used to live in, the construction techniques behind housing today haven’t progressed all that much. What has progressed are prices — it’s more expensive than ever to build a modern unit, and that’s just for housing — head over to commercial real estate and the numbers don’t look much better.
For Martin Diz and his team, that’s a problem. Diz is not exactly a lifelong builder — in fact, he was building proverbial rockets as an aerospace engineering PhD researcher several years ago. As he was talking to his roommate back then, who was studying structural engineering, he realized that some of the techniques that his roommate’s field was trying to pioneer had already been discovered by the aerospace folks decades ago.
His roommate was trying to simulate an earthquake to model how the tremors would affect objects like a table inside a building. As Diz recalled, he said “Hey dude, did you know that in aerospace engineering, we did the same thing for the space station 50 years ago? … I learned this in grad school, you know, in our basic course because it’s a very old technique.”
Diz is legitimately a nice chap, and totally not the kind of aerospace engineer who goes around talking about how aerospace solved everything a century ago (okay, maybe just a tad of that). But the interaction and followup conversation got him thinking about what aerospace as a field had solved, and whether some of those techniques could be used in other domains.
Diz and his roommate kept talking over the years, and eventually, the two formed Tango Builder. Tango’s main premise is to bring more sophisticated engineering techniques to construction, improving performance and quality while lowering costs. It’s part of the current YC batch, and previously raised a small seed round, which included participation from Tracy Young, co-founder and CEO of PlanGrid.
The two, plus one employee, have already worked on a handful of projects, with some early promising results. Tango helped to design a hospital for COVID-19 patients in Ecuador that saw total savings of $1 million by lowering structural costs by a third. They consulted on the creation of a justice center in Mexico, and were able to reduce the required steel in the project by 40%. And they used their platform to optimize wall thickness in a masonry home to bring total cost down by 15%. All numbers are reported by the company and have not been independently verified.
A look at Tango’s masonry home project. Photo from Tango Builder.
A look at Tango’s masonry home project. Photo from Tango Builder.
There is a heavy focus on structural integrity (as there should be in construction), but Tango particularly shines around seismic modeling. While earthquakes are perhaps most pronounced in places like California and Mexico, both of which suffered major tremors this past week, earthquakes are a lingering threat throughout the world, and buildings need to be designed to handle them even if they are rare.
Diz and his team want to give designers better tools to model what happens in different scenarios while understanding the trade-offs of various building materials and designs. “You’re building with steel stock, but it’s much more expensive now, so it’s up to the user or the owner to decide which of the paths he wants to take,” he said. Safety is always important, but how much steel do you place in a building that might see an earthquake once a century? That’s what Tango wants to help answer.
Beyond improving structural modeling, Tango’s big ambition is to find additional efficiencies in the construction process by helping everyone involved with construction work together through a better workflow. “Each person has benefits from the platform, the architect will get the approvals … faster, the engineer can focus on the creative side of things, the contractor” can bid earlier knowing what design is coming, Diz explained. Saving time in all these processes ultimately translates directly to a project’s bottom line.
It’s very early days of course, with just Diz, his co-founder Juan Aleman, and one employee “working extremely hard.” The hope though is that melding some aerospace engineering techniques with a much more robust and technical platform will help push construction to better quality while saving costs as well. After all, aerospace did all this a century ago.
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Darren Bechtel (yes, of those Bechtels) has raised $97.5 million for his firm, Brick & Mortar Ventures
Brick & Mortar Ventures, a young, San Francisco-based venture firm that’s focused on startups innovating in or around architecture, engineering, construction and facilities management, has closed with $97.2 million in capital commitments.
The fund is one in a sea of debut funds that have swung open their doors in recent years, though it’s also interesting for numerous reasons, beginning with its founder, Darren Bechtel, who knows a thing or two about the building industry. He’s a scion of the family that built the 120-year-old, privately held company Bechtel into one of the largest construction and engineering firms in the world. In fact, his brother, Brendan, who was named CEO in 2016, represents the fifth generation of Bechtels to lead the company. (Their sister, Katherine, is a project controls manager with the powerhouse outfit.)
Brick & Mortar’s investors are just as notable. They aren’t the typical pension funds and university endowments that many VCs try hard to lock down. Instead, they comprise a long list of companies that are part of the “construction value chain” and so have an interest in the latest and greatest developments in their respective industries. Among the firm’s backers, for example, is the special materials maker Ardex; the software giant Autodesk; the building materials company CEMEX; Ferguson Ventures, which is the venture arm of a huge U.S distributor of plumbing supplies; FMI, a management consulting company to the engineering and construction industry; Obayashi, a major Japanese construction company; Sidewalk Labs, which is Alphabet’s urban innovation organization; and United Rentals, one of the world’s largest equipment rental companies.
Brick & Mortar isn’t the first venture firm to focus on the so-called built world. Other firms that focus largely, if not exclusively, around the same themes include Fifth Wall Ventures, Navitas Capital, Corigin Ventures, Camber Creek, MetaProp, Starwood Capital and Tamarisc Ventures.
In fact, Darren Bechtel has ties to and is an individual investor in Fifth Wall, an LA-based firm that stormed onto the scene in 2017 with an equally impressive, and very different, roster of limited partners in the real estate industry, from which it has already amassed more than $700 million in capital commitments across two funds.
As Bechtel told us on a call late last week, he was going to go into business with Fifth Wall’s founders initially, but they wanted to raise a lot of money, and Bechtel was thinking more conservatively — for a reason. “I’d done five deals on AngelList with [Fifth Wall co-founder] Brendan [Wallace] and we’d started putting together a pitch deck, and as we were thinking through ideal fund structure and size, Brendan said $500 million and I said $50 million,” says Bechtel.
Wallace was thinking big, says Bechtel, because “hospitality already had some massive players — Airbnb, WeWork. It was a far more mature landscape, and Brendan thought that if we were going to own a category, we needed the capital to secure a leadership position in the right deals.”
Bechtel thinks Wallace was right, too. He says he just came to realize that construction tech — which is what really interested him — was in its own league, and it was in its infancy. Though the construction software company PlanGrid took off like gangbusters — Bechtel wrote the largest check during the company’s seed round — it wasn’t so long ago that “there were great, billion-dollar ideas being formed but the rounds were small and the valuations were small,” says Bechtel. Because the “investment community didn’t understand what it was looking at, I had concerns about our ability to generate returns if we had too large a fund.”
In the end, the friends and former Stanford MBA classmates decided to split their respective focus on real estate and hospitality (Fifth Wall) and the actual construction of buildings (Brick & Mortar), and things seem to have gone well since. As Fifth Wall has gained traction, so too has Brick & Mortar, which is now a couple of years in the making. Indeed, though Bechtel is announcing the close of Brick & Mortar’s first fund today, he already works with two principals and two associates, and they’ve collectively sourced and funded 16 startups to date with capital they’ve been raising from investors along the way.
One of those checks went to Fieldwire, a maker of field management software for construction teams. They’ve also backed Serious Labs, which trains workers how to use heavy equipment and tools via virtual reality software, and Curbio, a real estate technology startup that orchestrates turnkey renovations for home sellers, then gets paid back once the home is sold.
Brick & Mortar even has an exit already, having helped fund the construction software platform BuildingConnected, which sold last December to Autodesk. (Bechtel’s earlier investment in PlanGrid, which also sold to Autodesk last year, was a personal investment, one of roughly 40 he made before setting out to create a traditional venture firm.)
As for whether Brick & Mortar ever hunts for companies that Bechtel — the firm founded by Darren’s great-great-grandfather — might like to acquire or otherwise partner with, Darren is quick to note that the firm is not an investor in his venture fund or any or its portfolio companies, and he doesn’t have his finger on the pulse of what’s happening there.
“I don’t work at Bechtel or pretend to know what their intentions are, though my brother is CEO, so you could say I know a guy there.”
More, he notes, he doesn’t think it would make sense to fund a company that “a user would want to acquire. If one user buys [a startup’s tools] because they want exclusivity, they’re limiting the exit value of that company.” To underscore his point, he notes that “Bechtel does around $30 billion a year, but the construction market is an $11 trillion market.” In the end, he says, it’s “better to have a preferred relationship. Maybe you get the next year’s model released early; maybe you get custom colors.” But if you’ve developed a winning product, you want to make it accessible to everyone. “You benefit the most by having a technology adopted by the whole industry.”
Above, the Brick & Mortar Ventures team. From left to right: Austin Yount, senior associate; Alice Leung, associate; Curtis Rodgers, principal; Darren Bechtel, general partner; and Kaustubh Pandya, principal.
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Autodesk agrees to buy PlanGrid for $875 million
Autodesk announced plans to acquire PlanGrid for $875 million today. The San Francisco startup helped move blueprints from paper to the iPad when it launched in 2011.
This digitization of construction fits with Autodesk’s vision of digitizing design in general, and CEO Andrew Anagnost certainly recognized the transformational potential of the company he was buying. “There is a huge opportunity to streamline all aspects of construction through digitization and automation. The acquisition of PlanGrid will accelerate our efforts to improve construction workflows for every stakeholder in the construction process,” he said in a statement.
The company, which is a 2012 graduate of Y Combinator, raised just $69 million, so this appears to be a healthy exit for the them. PlanGrid took what was a paper-intensive task and shifted it to digital, taking a world of hand-written mark-ups and sticky notes onto the fledgling iPad.
In an interview with CEO and co-founder Tracy Young in 2015 at TechCrunch Disrupt in San Francisco, she said the industry was ripe for change. “The heart of construction is just a lot of construction blueprints information. It’s all tracked on paper right now and they’re constantly, constantly changing,” Young said at the time.
Those manual changes often resulted in errors she said, and that was costly for the contractors. As an engineer working for a construction company, who was at one time responsible for making the paper copies, she recognized that the process could be improved by moving it into the digital realm.
PlanGrid CEO Tracy Young onstage at TechCrunch Disrupt San Francisco in 2015
Her idea, which was kind of radical in 2011 when she started the company, was to move all that paper to the cloud and display it on an iPad. It’s important to remember that the enterprise was not rushing to the cloud in 2011, and most people considered the iPad at the time to be a consumer device, so what she and her co-founders were attempting was a true kind of industry transformation.
Young sees joining Autodesk as a way to continue building on that early vision. “PlanGrid has excelled at building beautiful, simple field collaboration software, while Autodesk has focused on connecting design to construction. Together, we can drive greater productivity and predictability on the jobsite,” she said in a statement.
PlanGrid currently has 400 employees, 12,000 customers and 120,000 paid users, and has been used on over a million construction projects worldwide, according to data provided by the companies. They believe that under Autodesk’s umbrella and combined with their existing product set, they can provide a complete construction solution and grow the business faster than PlanGrid could have on its own — pretty much the standard argument in an acquisition like this.
PlanGrid was efficient with the money it took. In fact the last raise was $40 million almost exactly three years ago. The deal is expected to close at the end of January pending the normal regulatory approval process.
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PlanGrid Lands $40 Million Investment To Expand Product
PlanGrid, the company that digitized the construction industry, announced today that it has landed a $40 million investment. Tenaya Capital led the round. Additional investors include Sequoia, Founders Fund, YC Continuity and Northgate. Today’s investment brings the total to over $58 million. PlanGrid CEO Tracy Young says they took the money, even though most of the Series A remains in… Read More
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