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Large construction projects often take a long time to finish, and subcontractors can get caught up in the flow of money, waiting, in certain circumstances, up to 80 days to be paid by general contractors -- this not only causes delays, but also means subcontractors are essentially being asked to finance their portion of the project. That’s where Constrafor comes in: as a SaaS construction procurement platform with embedded financing. CoVenture led the credit facility while FinTech Collective led the equity portion, with participation from Village Global, Clocktower Technology Ventures, Commerce Ventures and a group of individual tech founders from Ramp, Uber and Paxos. The equity went to company payroll, while the credit will be used to purchase the invoices.
“Subcontractors get hired on the project, and when they finish their first month of work, submit an invoice and then wait an average of 45 to 60 days — even up to 80 days — to get paid,” he added. “Meanwhile, they are buying equipment and borrowing money to be able to do all of this work. You’re not borrowing at a cheap rate, either, because most banks barely touch them.”
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