The funding raised by Constrafor will be used to build out new functionality and expand its subcontractor invoice finance offering, Early Pay Program (EPP).
The construction industry has suffered from lagging productivity because of the lack of tools that provide visibility and streamline workflows between General Contractors (GCs) and Subcontractors (Subs) at the different steps of construction procurement. This problem is compounded by the inherent delayed cash flows to Subs that leave them to finance the projects despite their precarious balance sheets and their high cost of capital.
Constrafor's platform helps these groups collaborate through documentation and information exchange, while its embedded EPP provides financing to the thousands of contractors active on the platform that are looking to accelerate their cash flows. Through EPP, Subs can get paid for their approved invoices within 24 to 48 hours, improving cash flows by up to 80 days without having to use traditional and costly lending sources.
The credit facility from CoVenture comes shortly after an equity round led by Fintech Collective with participation from funds such as Village Global, Clocktower Technology Ventures, Commerce Venture and tech founders from Ramp, Uber, and Paxos.
Constrafor leverages its procurement platform and proprietary data to de-risk and scale invoice financing in construction. Prior to the agreement with CoVenture, Constrafor had seen demand for invoice financing far outstrip the company's financing potential. With the new credit warehouse, the company will scale this part of the business, making the Early Pay Program a significant contributor to Constrafor's growth and a key driver in helping address lagging productivity in construction.
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