Levelset raises $30 million to improve money management for contractors in construction

Scott Wolfe, chief executive officer of the New Orleans-based money management and payment startup for contractors in the construction industry, always thought he’d be in the grocery business.

His family owned a number of grocery stores around New Orleans and he was readying himself to go into the family business when Hurricane Katrina hit.

As the family business faced significant losses in their stores, the construction and contracting service they’d built to develop the land the stores were on had a tremendous opportunity. Within the span of a year, Wolfe had pivoted the family’s operations to focus on renovations and restorations and launched fully into construction.

It was during that time that Wolfe saw the need for some sort of software service that could manage cash flow and payment for the tens to hundreds of small business contractors involved in getting a project done.

So he built Levelset to be that service.

Now the company has closed on $30 million in financing from Horizons Ventures, the investment firm backed by Li Ka-shing who is one of the world’s wealthiest billionaire property developers.

When Bart Swanson, an advisor to Horizons met Levelset through a mutual friend who did some investing around the New Orleans-based Tulane University ecosystem, he immediately felt it was an opportunity that Horizons investment committee would understand.

“This is a global issue,” says Swanson. “64 percent of construction businesses fail in their first five years because they have nowhere to turn for help,” when it comes to ensuring payment.

For now, Levelset is focused on digitizing billing and payments and providing insights into who is actually on a job site and the responsibilities that those workers have on site, according to Wolfe.

“There’s a ton of investment that has gone into the field,” says Wolfe. “What has seen a lack of as prolific an investment are things behind the scenes outside of the field that happen in the office. This is the accountants and administrative workers who have to take the information that’s in the field and turn it into money.”

For developers like Cheung Kong Holdings, Li’s development business, the promise of Levelset’s software is a huge boon. The construction industry runs on small businesses that lack software and services to process payments quickly. The time it takes to deal with paperwork can delay a project and ultimately cost developers money.

Horizons was joined in the new round by S3 Ventures, Altos Ventures and Darren Bechtel of Brick & Mortar Ventures. As a result of the investment, Swanson will take a seat on the company’s board.

In a recent survey of contractors by Levelset and T-Sheets by Quickbooks, more than half of contractors stated they were not paid on time and had significant cash flow challenges, and more than 75% craved more transparency in the payment process. This is no surprise given PWC’s working capital studies in the past decade demonstrating that construction industry payment speeds are the slowest of all (83+ days). 

“The effort required to get paid, and the cash stress put on contractors is unbelievable,” said Wolfe, in a statement.  “The world’s biggest industry is full of small and medium businesses who are the fabric of our economy. It’s crucial that they can do their work without worrying about cash.”

Tesorio raises $10M Series A to help companies track their cash flow

Tesorio, a startup that helps businesses aggregate and analyze their cash flow data, today announced that it has raised a $10 million Series A round led by Seattle’s Madrona Venture Group. Existing investors First Round Capital, Floodgate, Y Combinator, Fathom Capital and Fuel Capital. This brings Tesorio’s total funding to $17 million. Madrona’s Hope Cochran will join the company’s board.

The company is tackling an interesting market that is surprisingly underserved given that every company likely wants to be able to track its cash flow as closely as possible. In most companies, though, that’s still done with the help of Excel spreadsheets. The fact that Jeff Epstein, former CFO of Oracle; Ron Gill, former CFO of NetSuite; and Greg Henry, CFO of Couchbase and former SVP of Finance at ServiceNow all gave angle funding to Tesorio shows how big a problem this is.

“Billion-dollar companies are running their cashflow in Excel — and that’s real,” Tesorio co-founder and CEO Carlos Vega told me. “What that doesn’t allow you to do is use all that data that goes into that cashflow in a smart way. […] Imagine all of that could be connected and interconnected — and that’s basically what we’re building.”

app image 01 total cash flow

Tesorio helps businesses aggregate all of their cash flow — in some ways, you can think of it as a Mint for businesses — and then runs its AI models over it to predict a company’s overall financial health. Current customers include the likes of Veeva Systems, Box, and WP Engine, who use the company’s systems to, for example, automate their accounts payable operations to understand when customers are likely to pay. While there are other tools that help you manage the overall workflow, Vega argues that Tesorio is different because it can pull in data from all of these disparate systems and create a cash flow forecast based on this.

“Many departments have systems of record to log things like accounting entries, bank info, billings, customer interactions, spend, etc,” Vega explained. “The exciting opportunity is to tie that data together dynamically so you can have a multifaceted view on the trajectory of your business (with a focus on the effects to cash flow) and then automate the levers that can help you impact cash.”

While the company didn’t disclose any revenue numbers, it did not that its revenue grew 4x year-over-year in 2018.

As Vega told me, it’s usually the financial teams and CFO’s that adopt Tesorio. The company focuses on bringing on companies with 100 to 3000 employees and it already has a number of international customers, too. In total, the platform has already analyzed $56 billion in payments, 10 million invoices and 5 million user activities. As will all machine learning services, every new transaction also helps to make its models more precise.

As usual, Tesorio will use the new funding to expand its product — with a special focus on adding integrations with other finance systems — and its expand its go-to-market initiatives.

app image 02 cash flow forecast

Madrona’s Hope Cochran, who herself was a public company CFO during her time at Clearwire and King Digital, stressed the need for a service like this. “The ultimate financial metric for a company is Cash,” she writes in today’s announcement. “Not just the current balance, but the trajectory of the balance. In the vast majority of companies, this analysis is performed on a spreadsheet. One containing many links, often circular references, and pulling in data from multiple sources. The risk of an error, a break, is high. ”