Nashville Built construction loan firm raised $ 21 million from venture capital firms in San Francisco and New York City, marking one of the largest investments in a local business this year.
Built, led by CEO Chase Gilbert, was formed in 2014 to streamline the process of financing housing and commercial construction. Index Ventures in San Francisco led the investment, which also included equity from Nyca in New York, bringing the company’s total raised capital to $ 25 million.
“It’s a trillion dollar industry that affects every person in this country and yet it has been extremely underserved by technology, especially the way construction loans are managed,” Gilbert said.
The deal marks another important victory for Nashville Tech Companies outside of the healthcare industry, which has long dominated the city’s entrepreneurial landscape. Emma email marketing company sold in october for an undisclosed amount and cognitive computing company Digital Reasoning raised more than $ 76 million of Goldman Sachs, Credit Suisse, Nasdaq and other investors over the past three years.
Gilbert co-founded the company with business developer Scott Sohr and Andrew Sohr, who as a builder had become frustrated with the construction loan process.
Builders typically use construction loans as projects progress and each payment cycle requires coordination with lenders, builders, inspectors, and title companies to verify a builder’s work. This process can take days or even weeks and relies on multiple spreadsheets, faxes and emails, Gilbert said.
Built allows builders to request an inspection when they ask for money, and inspectors can file reports in real time, saving days on the process. For each party involved, Built provides an online overview of project financing, similar to online banking.
“We used modern technology to connect everyone involved in the construction process,” Gilbert said. “Anyone can see what’s going on at any time and can apply for funds to move the project forward in a much safer and more efficient manner. “
Built’s clients are lenders, and approximately 35 banks have completed approximately $ 6.6 billion in transactions using Built over the past two and a half years. Lenders are located across the United States, in cities like Portland, Seattle, Los Angeles, and Atlanta. Built charges banks a per loan fee that varies depending on the lender and the size of the loan.
The product helps banks and builders, but also benefits homebuyers by speeding up the construction process at a time when housing stock is low, Gilbert said.
“If we can make it safer for lenders to deploy capital in construction and do it with better information, as opposed to gut feeling, that solves a much bigger problem than just a back-end technology platform. office for banks, ”Gilbert said.
Gilbert said Index of companies contacted Built at a time when the company was not seeking outside capital and Built became receptive to the investment over the course of several months. Index Venture’s portfolio includes Etsy, Facebook, Dropbox, Skype, and Slack. Nyca is headed by Hans Morris, a former Visa and Citigroup executive.
“Built is poised to completely transform construction loans,” Index Ventures investor Mark Goldberg said in a statement. “This is a massive industry that has been bogged down by cumbersome, pen and paper based processes. “
Gilbert, 29, replaced Scott Sohr as CEO in October, and he previously ran the company as chairman. Sohr, an investor in the properties of commercial real estate company Elmington Capital and owner of Environmental Waste Solutions, remains a director of Built and continues to hold an interest in the company.
Contact Jamie McGee at 615-259-8071 and on Twitter @JamieMcGee_.