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.”