The construction industry has a slow payment problem. Studies have shown that found Construction companies take an average of two to three months to receive payment, due to factors such as delays, multiple layers of payment and cost overruns.
The cost of slow payments on construction contracts scaling to $273 billion in 2023, representing 14% of total project spending that year.
Matthew Calvano, along with Henry Bradlow and Francisco Enriquez, thought the cause lay in administrative inefficiencies. So in 2021, the trio co-founded Adapteda platform that provides tools designed 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 believe this complex network, combined with the fact that most construction companies are small and medium-sized businesses (SMEs) that lack financial expertise, are the main drivers of the industry’s slow payments.”
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. With Adaptive’s product, customers can upload documents such as insurance contracts and payment requests in formats such as SMS and PDF and leverage automations to take action on these uploads, such as approving requests and budgets.
“We have developed several generative AI algorithms to automate financial management and accounting workflows unique to construction,” Calvano said. “Our main competitor is the manual work required to manage finances, which typically relies on email, Excel, file sharing, and the financial functions of legacy project management software.
Other Adaptive rivals include Briqa startup with a similar financial workflow automation sales pitch; Beama fintech that aims to streamline payments, invoices and receipts for contractors; and Creators Centerthat decrypts the accounts payable data of construction companies.
But Adaptive runs a seemingly healthy business, with more than 280 construction companies on its client list, ranging from custom home builders and commercial general contractors to real estate developers.
The short-term growth plan is to focus on acquiring outsourced customers by building customized products for that segment, Calvano said. In the medium term, Adaptive, which currently makes all of its revenue through software, will explore monetizing different integrated payments, insurance and payroll functions, according to Calvano.
“Since we manage all of our clients’ financial workflows, there are numerous opportunities for integrated finance, especially with our focus on SMBs that tend to be underserved when it comes to financial services,” Calvano said.
Andreessen Horowitz, Definition, Exponent, 3kvc, Box Group and Gokul Rajaram also participated in Adaptive’s Series A funding round, bringing the startup’s total raised to $26.4 million. A portion of the proceeds will go toward expanding New York-based Adaptive’s staff from 29 to 45 by the end of the year, Calvano tells TechCrunch.
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