a16z leads $ 6.5 million seed round for Adaptive, a construction software and fintech game – TechCrunch

In the construction industry, time is money.

But with so many moving parts, it can be extremely challenging for construction companies to manage the administrative aspects of the economy.

Adaptive, an 11-month-old startup that has set out to give construction teams better tools to manage their back offices, has raised $ 6.5 million in a seed round led by Andreessen Horowitz (a16z). This adds to the $ 750,000 the company raised in pre-financing in August last year.

In particular, founders and executives from companies such as Airbase, Brex and Ramp – who ironically all compete with each other – also put money in the round along with 3KVC, BoxGroup, Exponent and Definition. Also among Adaptive’s supporters is a nameless construction accounting firm with 100 clients across the country.

Adaptive’s offerings are aimed at main contractors, but not gigantic – think of several SMEs, many of which may not have the resources to hire accounting staff. It is based on the assumption that current methods for GCs to keep track of expenses are “time-consuming, error-prone and provide very limited insight into project performance”, which can lead to disputes between parties. There are many transactions performed in a given project, and each one requires several steps for approval and reconciliation.

“I would say that the primary difference between the status quo process and what we are working on is that we have a very focused approach to automate workflows and reconciliation with our software,” said co-founder and CEO. Matthew Calvano in an interview with TechCrunch. “It gives contractors more visibility, and also fewer delays in payment times.”

For example, he said that invoices that arrive at an office either by mail or by e-mail are processed via an “offline ad hoc process” that may involve a combination of Excel, e-mail, older accounting software and shared files.

Co-founder and CTO Henry Bradlow had previously written algorithms to power rocket ships on SpaceX, so the trio — Calvano, Francisco Enriquez and Bradlow – were determined to find a way for artificial intelligence to streamline the construction’s back office.

By using Adaptive, said co-founder Francisco Enriquez in an interviewGCs can take a picture of an invoice and send it to the software, which then uses OCR (optical character recognition) to read the invoice “with fairly high accuracy”, extract the cost code and the job associated with the invoice and start routing the approval process through a office.

“It’s a combination of using machine learning to read the invoice plus collaboration to automate many of the approval workflows,” Enriquez added. “And then, of course, we let them pay, of course.”

Simply put, Adaptive’s goal is to automate consumption management, thus saving customers time and money while delivering real-time reporting and insight. In other words, it wants to take care of all construction finance administration for smaller GCs. In the long term, the start-up has even more ambitious plans.

“In the not-too-distant future, we will be a one-stop shop for all financial workflows and products in the industry – from bidding suppliers to buying insurance to banking and working capital,” the company said in a blog post announcing the increase.

Interestingly, as many startups are, Adaptive was born by the founders who tried to solve another problem.

Trio worked with a number of homebuilders in Austin, Texas, who were in the process of acquiring land or plots of land for another product. Through that experience, the developers guided them to what was more of a pain point for them: bookkeeping.

“We started charging people monthly to manage their books in the back office and was trained on QuickBooks to only manage day to day, Calvano said.

Today, he says Adaptive “works closely” with a number of customers who “actively” use the product, and aims for a broad release later this year.

A16z general partner David Haber told TechCrunch via email it the company has “spent a lot of time at the intersection of building software and fintech” and was “uniquely impressed with The Adaptive team and the hard-earned product and distribution insights they had developed. ”

In particular, he praised the team’s spend months running an accounting service in white gloves before starting the company.

“This gave them an intimate understanding of workflows for general contractors and helped tailor the product to meet the industry’s unique needs and requirements,” Haber added. “We also love it when founders have a unique distribution insight, and it was clear that the Adaptive team had been very thoughtful about the GTM (go-to-market) approach and had already developed strong relationships with key industry groups and service providers.”

This headline was updated after publication to more accurately reflect participating investors.

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