CoFi, a Lindon, Utah-based construction loan marketplace that provides debt financing for developers and builders across the country, recently announced it has raised $7 million in seed funding as it seeks to transform the construction financing experience for all stakeholders in the construction industry.
These funds will allow CoFi to process billions of dollars in active loan requests nationwide, helping builders finance more projects by paying workers more quickly. With the new funding, CoFi will help builders address the current housing supply crisis across the country and especially in rapidly-growing Utah, by helping builders finance more projects more quickly and helping them retain workers by paying subcontractors in a matter of days not weeks.
The company works with a network of partner lenders that provide capital for construction projects, mostly multi-family and residential. The company's software platform facilitates extremely fast payments to workers on construction job sites.
"Paying subcontractors quickly is not standard in the construction industry," said Co-founder Mike Lacey "We are contractors. We know how important it is to pay people quickly. So we took the payment time from an average of 74 days down to on average every four or five days."
Co-founders Cam Harris and Mike Lacey sat down with TechBuzz and described how they were both construction management majors at BYU, became contractors and, by chance, met on a job site."
"Working together at job sites we compared notes about the painful process of paying sub contractors," said Harris. "We each had stories about sub-contractors and contractors not getting paid on time; they ended up having to stop work, drop everything, drive around for hours picking up checks and hastily paying their workers and suppliers. It was a problem that Cam and I fell in love with and got passionate about. We said, ‘Hey, let's go try and solve this problem,' maybe naively. But now we are seeing it's starting to resonate, and it's actually changing lives of contractors and subcontractors that need to be paid for their work."
They explained how the platform he built is organized:
- Construction Loan Marketplace: By engaging multiple partner lenders in a hand-picked, strategically grown lender pool, CoFi can ensure the best rates and terms for construction loans. CoFi was built as construction loan marketplace with lenders that specialize in acquisition, development and vertical construction so builders can spend their time focusing on building.
- Digital Lending Platform: Construction has one of the highest failure rates of any industry and the number one cause is slow payments. Subcontractors and suppliers live on cash flow and getting them paid fast gives builders leverage, loyalty and sets them apart in the industry. Cofi's digital lending platform offers users an in-house, networked inspection strategy, allowing builders to streamline cash to the job site so everyone can get paid quickly.
Having been contractors, Harris and Lacey said they know what builders need to get their projects financed. They landed on the idea of a marketplace after they experimented with being a more traditional SaaS provider. They wanted to address the lending process more completely.
"So instead of builders having to go through the process with multiple lenders to see what potential term sheets they'll get, they come directly to us," said Harris.
"We get all their information," Lacey added. "We essentially underwrite the project. We have not just a local network, but a nationwide network that can result in the right lending partner working with the builder to find the right loan product. We built CoFi into the kind of tool I wish I'd had as a builder — one where we've replaced sending inspectors out to a job site with tech driven remote inspections to capture project progress and allow developers to sign off on the distribution of funds. This flexible payment schedule wildly improves upon the industry standard of an average 74-day pay cycle. It can mean all the difference for a builder who might otherwise lose good workers because they can't get paid quickly enough."
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