New York-based Constrafor, which provides AI-powered software and financing to the construction industry, has closed a $14 million Series A led by NFX, and additionally secured a $250 million credit facility from Wafra and Centerline. Its prior backers include FinTech Collective, Commerce Ventures, and Motive Ventures.
Founded in 2019 by MIT engineer Anwar Ghauche and former SalesForce engineer Douglas Reed, Constrafor helps modernize the construction industry, and additionally addresses its cash-flow issues by enabling quicker payments to subcontractors.
Industry Smarts
With an MBA from Stanford Business School and a stint at an AI-powered financial services firm, Ghauche turned an entrepreneur, leveraging some prior knowledge of the industry derived from his parents who were in the construction business. Ghauche serves as Constrafor’s CEO, while Reed serves as chief technology officer.
“This Series A funding is testament to the critical need for Constrafor in the construction sector. We’re not just providing features or point solutions; we’re rewiring the construction industry’s financial operating system,” said Ghauche, who received an MBA from Stanford University. “With this investment, we’re poised to expand our reach and impact, helping more contractors build sustainable, profitable businesses.”
According to Axios, “the financing portion — in which Constrafor effectively pays the subcontractor early by buying the invoice — makes up about 75% of the company’s revenue,” while the software business brings in the rest. Data centers, semiconductors and government infrastructure drive Constrafor’s business from large customers with over $100 million in annual revenue.
Financing Is Key Offering
Constrafor’s key financing product is called Early Pay Program. It accelerates payments to subcontractors by purchasing the invoices at fair prices, easing cash flow. Its second offering, called Subcontractor CFO Suite is in the works. The suite will offer more sophisticated tools, such as project-based accounting, supplier management and enhanced financial controls.
Commercial Real Estate
MacKenzie Companies
Advertising / Media / Communications / Public Relations
Nevins & Associates
Financial Services / Investment Firms
Chesapeake Corporate Advisors
Commercial Real Estate
Monday Properties
Venture Capital
Blue Delta Capital Partners
Internet / Technology
Foxtrot Media
“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,” Ghauche, a former Booz & Company executive, told TechCrunch. “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.”
The startup’s SaaS platform provides contractors with integrated procurement tools, simplified invoicing and a so-called Discovery Network connecting them to a wide roster of subcontractors. Its AI-powered suite can predict when materials would be delivered, helping contractors refine construction plans. Constrafor’s Prequal and its AI-powered Insurance CoPilot offer contractors ways to streamline insurance documents and automate full policy compliance reviews.
According to Ghauche, construction firms spend less than 1.5% of revenue on technology, compared with 3.5% in other industries. “That’s why you see the low productivity and a lot of companies in this industry struggling,” he told TechCrunch.
