The construction industry grapples with notoriously slow payments, often taking two to three months for companies to get paid. This delay, caused by various factors such as multiple payment layers, delays, and cost overruns, resulted in $273 billion in sluggish payments in 2023, representing 14% of the year’s total project expenditures. Identifying back-office inefficiencies as a significant contributor, Matthew Calvano, Henry Bradlow, and Francisco Enriquez founded Adaptive in 2021 to streamline payments and accounting for construction contractors.
Construction payments involve a complex chain, including banks, developers, general contractors, and subcontractors. Most construction companies are small- and medium-sized businesses (SMBs) that lack financial expertise, exacerbating payment delays. Adaptive aims to address these inefficiencies with automation tools that simplify financial management tasks, ensuring faster and more reliable payments.
Adaptive’s Innovative Solution
Adaptive provides a platform with various workflow automations for financial management, such as budgeting, expense tracking, accounts payable, and electronic payments. By allowing customers to upload documents like insurance agreements and payment requests in formats such as SMS and PDF, Adaptive leverages automation to approve requests and budgets efficiently.
“We’ve built several generative AI algorithms to automate the financial management and bookkeeping workflows unique to construction,” said Calvano. This innovation positions Adaptive against manual labor and legacy project management software, which traditionally support financial tasks through email, Excel, and file sharing.
Adaptive faces competition from startups like Briq, which offers similar financial workflow automation, Beam, a fintech streamlining payments and invoices for contractors, and MakersHub, which deciphers accounts payable data for construction companies. Despite this competition, Adaptive has established a robust customer base, serving over 280 construction companies, including custom homebuilders, commercial general contractors, and real estate developers.
Growth and Future Plans
Adaptive recently closed a $19 million Series A round led by Emergence Capital, bringing its total funding to $26.4 million. Andreessen Horowitz, Definition, Exponent, 3kvc, Box Group, and Gokul Rajaram also participated in this round. The company plans to use a portion of these funds to expand its workforce from 29 to 45 employees by the end of the year.
In the near term, Adaptive aims to attract more subcontractor clients by developing tailored products for this segment. Medium-term goals include exploring monetization opportunities through integrated payments, insurance, and payroll functions. “Given that we manage our customers’ entire financial workflows, there are numerous opportunities for embedded finance, especially with our focus on SMBs that tend to be underserved when it comes to financial services,” Calvano said.
In conclusion, Adaptive is poised to transform the construction industry’s financial management processes with its innovative automation tools. By addressing back-office inefficiencies, Adaptive helps construction companies overcome the challenge of slow payments, ultimately enhancing their financial health and operational efficiency. Strong financial backing and a clear growth strategy position Adaptive to become a key player in the construction fintech space, ensuring faster and more reliable payments for construction businesses of all sizes.
See also: The AI Financial Results Paradox
