Construction procurement company Constrafor goes ‘Safe’ way with new capital


While more construction projects are being initiated, payments to contractors and their subcontractors are creating bottlenecks in the normal process of project completion.

“Banks are more and more careful with their own financing of development projects, which means they are reducing fees on their own,” Contrafor CEO Anwar Gauche told TechCrunch. “This means that subcontractors’ payment periods are getting longer rather than shorter, making it more difficult for subcontractors because they often don’t have the means to go to banks and increase their lines of credit.”

Ghauche and Douglas Reed launched Constrafor, a SaaS construction procurement platform that provides embedded finance and software for general contractors to manage their subcontractor workflows. The prepayment program frees up cash flow and de-risks the subcontractor from relying on traditional and costly credit options. The general contractor then pays Constrafor for the invoice.

The company It raised $106.3 million in equity and debt by 2022, and since then Constrafor has grown from 15,000 customers to 23,000. Ghauche acknowledged that the company had “a bump in revenue” during this period, but said it had nothing to do with the credit market or the network. Since then, the company has improved its credit origination and is growing by 25% month over month this year with “sustainable growth”.

Constrafor joined the AI ​​trend by launching some initiatives related to automating manual reviews. For example, insurance. They also partnered with Stripe to offer a banking product and now over 80 companies bank with them.

Now Constrafor is back with another $7.5 million round of funding through Safe Note, led by Motive Partners, which closed this month. New investor Fifth Wall joins existing investors including Fintech Collective, Clocktower Technology Ventures, Commerce Ventures, FJ Labs and Notrevis. This is the company in the year It will have $14 million in equity and $100 million in debt raised since its inception in 2019.

Anwar Ghauche, CEO, Constrafor

Anwar Gauche, CEO of Constrafor. Image Credits: Constrafor

When asked why Constrafor left after the Safe Note and pricing round, Guachu said he didn’t think “the market is good today in terms of pricing.”

“We’ve seen that deterioration for multiples of fintech companies,” Ghauche added. “We’ve found that this is the best way for us to continue our growth, so our growth on the revenue side for Series A, so we’re targeting to break $5 million in ARR before we go for Series A. If we can be at $10 million ARR, that would be even better.

The investment also includes access to credit facilities with Apollo. That additional capital capacity gives Constrafor “scalable credit and capital for the business,” Ghauche said.

And at a time when other financial players are increasing prices due to the difficult economic conditions, Constrafor can lower the prices to customers and pass on the savings to them, he said.

Meanwhile, the new capital will be used to pay salaries and finance operations. Ghauche intends to standardize the ElyPay program and open Constrafor’s APIs to general contractor customers.

“We’re seeing quite a few construction startups right now, and we feel like we have a pretty big network right now, so we want to open up our platform for these companies to connect with us and build on Constrafor.” Ghauche said.



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