CoFi, a Lindon, Utah-based construction loan marketplace that provides debt financing to developers and builders across the country, recently announced that it has raised $7 million in seed funding. as he sought to transform the construction finance experience for all stakeholders in the construction industry.
These funds will allow CoFi to process billions of dollars in active loan applications nationwide, helping builders finance more projects by paying workers faster. With the new funding, CoFi will help builders address the current housing supply crisis across the country and particularly in rapidly growing Utah, by helping builders finance more projects faster and by helping them retain workers by paying subcontractors in days, not weeks.
The company works with a network of partner lenders who provide capital for construction projects, mainly multi-family and residential. The company’s software platform facilitates extremely fast payments to workers on construction sites.
“Paying subcontractors quickly is not the norm in the construction industry,” said co-founder Mike Lacey “We are contractors. We know how important it is to pay people quickly. We have therefore reduced the payment period from an average of 74 days to an average of 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 construction site. “
“Working together on construction sites, we compared notes on the painful process of paying subcontractors,” Harris said. “We each had stories of subcontractors and contractors not being paid on time; they ended up having to stop work, drop everything, drive for hours to pick up checks and hastily pay their bills. workers and their suppliers. It was a problem that Cam and I fell in love with and became passionate about. We said, “Hey, let’s try to solve this problem,” maybe naively. But now we see that it’s starting to resonate, and it’s actually changing the lives of contractors and sub-contractors who 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 and strategically developed pool of lenders, CoFi can secure the best rates and terms for construction loans. CoFi was designed as a construction lending marketplace with lenders specializing in acquisition, development and vertical construction so that builders could spend their time focusing on construction.
- Digital Lending Platform: Construction has one of the highest failure rates of any industry and the main cause is slow payments. Subcontractors and suppliers live off cash flow and their prompt payment gives builders leverage, loyalty and sets them apart in the industry. Cofi’s digital lending platform offers users a networked in-house inspection strategy, allowing builders to streamline money on the jobsite so everyone can get paid quickly.
Having been entrepreneurs, Harris and Lacey said they know what builders need to finance their projects. They came up with the idea for a market after experimenting with being a more traditional SaaS provider. They wanted to approach the loan 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 to us directly,” Harris said.
“We get all of their information,” Lacey added. “We basically underwrite the project. We don’t just have a local network, but a nationwide network that can allow the right lending partner to work with the builder to find the right loan product. We’ve integrated CoFi into the type of tool I wish I’d had as a builder – one where we replaced dispatching inspectors to a job site with technology-driven remote inspections to capture project progress and allow developers to approve distribution of funds.This flexible payment schedule significantly improves on the industry standard of an average pay cycle of 74 days.This can make all the difference to a builder who might otherwise lose good workers because they cannot be paid quickly enough.