Goldman Sachs backs $8M funding round for construction finance startup Rabbet
- Goldman Sachs’ Principal Strategic Investments group is backing an $8 million Series A financing round for construction finance platform Rabbet. Other investors include QED Investors and Camber Creek.
- Rabbet, formerly known as Contract Simply, employs a software-as-a-service (SaaS) platform that uses machine learning for the more efficient processing of construction draw requests, which allows faster decision-making, as well as expedited payments and increased compliance. Rabbet will use the money raised in this round to continue product development; grow its Austin-area engineering and sales teams; and explore additional partnerships with developers, construction lenders and other industry stakeholders.
- "Through intelligent automation," said Will Mitchell, CEO and co-founder of Rabbet, "our platform provides operational efficiency, improved customer experience and faster payments, representing a $21 billion opportunity for lenders and borrowers.” David Bell, Managing Director of Goldman Sachs’ Construction group, said Rabbet’s is the only solution that can handle the complexity of the construction lending industry's move toward automation.
Rabbet uses what it calls the Contextualized Construction Draw format to connect draw-related information from various parties. The format links relevant information from the budget, pay applications, invoices and lien releases so that users can review draw request amounts, track retainage and verify the documents that back up each line item in a draw request.
The platform also learns each new lender’s draw request requirements and then verifies submitted documents against those standards. Rabbet’s service supports multiple funding sources as well.
Just as lenders are looking to new financial technology solutions, so are general contractors, for the purpose of processing pay applications on their end. Oracle’s Textura, for example, allows for expedited payments to subcontractors, which can number in the dozens on large projects, but also takes care of the often complicated lien waiver collection process as well.
Typically, when a subcontractor submits a pay request for work completed through a certain date, it must also submit assurances that it has paid its sub-subcontractors and suppliers either through that date or at least through the date of the previous pay request. The subcontractor proves this by collecting and submitting to the general contractor signed lien waivers. This can be a confusing exercise in patience for many general contractors as they try to keep track of a sea of paper.
A program like Textura, however, automates that collection process and even sends deficiency and pay hold notices to subcontractors if they omit a required lien waiver or have an error elsewhere in their pay application paperwork. Textura also enables all parties to avoid the payday traffic jam at the general contractor’s office by sending electronic payments to subcontractors.
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