- Levelset, the New Orleans-based tech company that helps construction contractors manage and complete the tangle of compliance paperwork needed to secure payment in a timely manner, announced today a $30 million round of funding led by Horizons Ventures with participation from S3 Ventures, Altos Ventures, Operating Venture Capital, Michael Gollner and Darren Bechtel of Brick & Mortar Ventures, bringing total outside investment to $47 million. As part of the deal, Bart Swanson of Horizons will join Levelset's board of directors.
- Levelset, formerly know as zlien, plans to use the money to grow the company, to continue developing digital customer solutions that help streamline and speed up the payment process and to keep educating contractors on the payment rules that vary from one jurisdiction to the next in the United States.
- Some of the services Levelset currently provides are the filing of notices of commencement, mechanics liens and bond claims; sending demands for payment and lien waivers; verified reviews of how contractors across the country pay their vendors; and a team of payment and legal experts to assist customers.
What drew Bechtel to Levelset initially is that the company was focused on a very specific pain point — the contractor payment process and, for subcontractors and suppliers, the difficulties in trying to collect their money.
Adding to that pain, he said, is the extensive paperwork that must be completed in order to secure mechanics lien rights, often the only way construction industry contractors and suppliers can safeguard their positions.
Adding the issue of late payments to the ever-constant productivity issues and schedule slippage the construction industry is experiencing, he said, makes it even more challenging for contractors, many of whom work in an environment of such relatively low margins to begin with.
"What I really liked [about Levelset]," Bechtel said, "was how focused of a solution and pain point that they were going after instead of trying to promote another project management solution or promote the operating system of construction."
While Levelset aims to help both general contractors and subcontractors organize their payment-related processes, subcontractors most certainly benefit from anything that speeds up the receipt of much-needed cash. On most projects, subcontractors provide the lion's share of the material and labor costs, and delayed payment can keep them from being able to meet their payroll obligations and pay their suppliers.
More than 60% of subcontractors, according to a report from construction finance platform Rabbet, choose not to bid on projects that are run by owners or general contractors with a reputation for slow payments, and 72% said they would offer a 1% to 5% discount just for faster payment. What is even more startling is that only 39% of subcontractors reported being able to make up for late payments with cash on hand, meaning that the rest of those that cannot secure their money as expected have to use costly lines of credit or pull from credit cards and savings to pay their bills.
Statistics like Rabbet's are what drives Levelset.
"Ultimately, what we're really passionate about is getting contractors to be empowered to always get what they earn," said Levelset CEO Scott Wolfe, "and what we build products to do is to get cash to contractors faster."
So, Wolfe said, Levelset is going to continue investing in developing the solutions that move the company closer to that goal.
Wolfe said that on average it takes about 80 days for contractors to get paid, but Levelset users average approximately 40 days. "Our vision," he said, "is to get it down to one day."