Behind every new building is a construction crew pouring concrete and laying bricks to erect the structure on time and schedule. Contractors work hard to coordinate the time and labor of their workers to complete these projects within the specified budget. However, these entities, particularly subcontractors, struggle to get paid on time or secure access to much-needed capital. The cash flow issues that arise from late payments or inaccessible financing routinely leads to these small-to-medium-sized organizations going out of business. Patrick Hogan, Blake Robertson and Chris Woodard recognized the financial challenges contractors regularly face and created Handle as their solution. Handle is a construction technology startup that provides software tools to automate routine tasks associated with receiving payments and also offers financing options to construction firms. The San Francisco-based startup has raised $4.5 million in equity from institutional investors such as Global Founders Capital, Zigg Capital, and standout angel investors like Plaid cofounders Zach Perret and William Hockey, and PlanGrid cofounders Tracy Young and Ralph Gootee.
Gootee says, “Through PlanGrid, we’ve helped tens of thousands of construction companies adopt new technology. We invested in Handle, because it’s intuitive, fits nicely into existing billing workflows, and solves a pain point every construction project faces.”
The pain point of late payments within the construction industry is a canonical, enduring problem. Thomas C. Schleifer, Ph.D., a prominent construction industry expert, identifies the core issue surrounding late payments. He claims, “…construction billing procedures, which are unique, with one-sided contract terms providing designers and owners unreasonable control over the payment process.” These billing procedures, being a norm in the construction industry, have conditioned general contractors, specialty subcontractors and material suppliers in the value chain to tacitly accept unfair terms regarding payment. The unfairness stems from the complexity of the billing procedures between entities. Schleifer insists that most contractors “feel they have no influence over the payment process” as the main consequence of these norms. These standards around have immense financial consequences. Last year, late payments cost the construction industry $64 billion, according to Rabbet’s 2019 Construction Payments Report. The economic costs of late payments are directly tied to, and a consequence of the credit-based nature of transactions between entities in the construction industry.Today In: Enterprise Tech
Hockey says, “Growing up within a family of contractors, I understand the burdens that contractors and suppliers face in adopting new technology and financing. Handle has helped change this landscape by breaking down these barriers and providing a seamless experience for the entire construction industry. In general, financial management in the construction industry is extremely laborious – and even more expensive than many other industries given its scale and complexing. At the same time, it’s one of the most important parts of the construction process. I think that Handle is streamlining a lot of this financial management, which gives them a great competitive edge.”