The construction industry has an issue with slow payments. Studies have found that because of aspects similar to delays, multiple payment layers and price overruns, it takes on average two to 3 months for construction corporations to receive their money.
The costs of slow payments for construction contracts climbed to $273 billion in 2023, representing 14% of total project spending that 12 months.
Matthew Calvano, Henry Bradlow and Francisco Enriquez believed that the cause was inefficiencies within the back office. In 2021, the trio founded Adaptablea platform that gives tools to simplify payments and accounting for general construction contractors.
“The construction payment chain involves multiple layers, including banks, developers, general contractors and subcontractors,” Calvano told TechCrunch. “We imagine this complex web, coupled with the incontrovertible fact that most construction corporations are small and medium-sized enterprises (SMEs) with no financial expertise, is the foundation reason behind slow payments within the industry.”
Adaptive, which this week closed a $19 million Series A funding round led by Emergence Capital, offers a variety of workflow automations for financial management, including budgeting, expense tracking, accounts payable and electronic payments. Adaptive's product lets customers upload documents similar to insurance contracts and payment requests in formats similar to SMS and PDF, and use automations to reply to those uploads, similar to approving requests and budgets.
“We have developed several generative AI algorithms to automate financial management and accounting workflows typical in the development industry,” said Calvano. “Our biggest competition is the manual work required to administer funds, which is often supported by email, Excel, file sharing and the financial features of legacy project management software.”
Adaptive's other competitors include Briq, a startup with the same selling point for automating financial workflows; Beam, a fintech company that goals to streamline payments, invoices and receipts for construction contractors; and MakersHub, which decodes accounts payable data for construction corporations.
But by all appearances, Adaptive's business is doing well: Its customers include over 280 construction corporations – from individual home builders and industrial general contractors to real estate developers.
The short-term growth plan, in line with Calvano, is to give attention to acquiring subcontractor customers by developing customized products for this segment. In the medium term, Adaptive – which currently generates all of its revenue from software – will explore monetizing various integrated payment, insurance and payroll functions, Calvano said.
“As we manage our clients’ entire financial workflows, there are many opportunities for embedded finance, especially with our give attention to SMBs, which are inclined to be underserved in financial services,” said Calvano.
Andreessen Horowitz, Definition, Exponent, 3kvc, Box Group and Gokul Rajaram also participated in Adaptive's Series A, bringing the startup's total raised to $26.4 million. Part of the proceeds will go toward expanding New York-based Adaptive's workforce from 29 to 45 employees by 12 months's end, Calvano tells TechCrunch.
