The construction industry is notorious for its slow payment processes, often taking two to three months for companies to receive payments. With a complex network of payment layers and unforeseen cost overruns, these inefficiencies became particularly pronounced in 2023 when delayed construction contract payments surged to $273 billion, constituting 14% of total project expenditures for that year. Seeing an opportunity to address these delays, Matthew Calvano, Henry Bradlow, and Francisco Enriquez co-founded Adaptive in 2021. The company focuses on facilitating smoother financial operations for general construction contractors by targeting ‘back-office’ inefficiencies.
Founders’ Vision
Matthew Calvano, Henry Bradlow, and Francisco Enriquez identified the back-office inefficiencies in financial management as a significant cause of payment delays in the construction industry. They established Adaptive in 2021 with a vision to streamline the entire financial workflow, from budgeting to electronic payments. Adaptive’s platform delivers workflow automations tailored to financial management within the construction industry. This includes features for budgeting, expense tracking, accounts payable, and electronic payments. One standout feature allows customers to upload documents like insurance agreements and payment requests in various formats, which are then processed using generative AI algorithms. This automation streamlines the approval of requests and budgets, significantly reducing delays.Adaptive offers various workflow automation tools specifically designed to manage financial operations in the construction sector. These tools include budgeting, expense tracking, accounts payable, and electronic payments, all integral to a seamless financial workflow. One key feature of the platform allows for the upload of documents such as insurance agreements and payment requests in formats including SMS and PDF. Utilizing generative AI algorithms, these documents are automatically processed and approved, significantly reducing the manual intervention required. This results in quicker payment cycles and addresses one of the industry’s most pressing issues—slow payments.Competitive Landscape
The construction industry’s current landscape for financial management primarily involves traditional manual labor supported by email, Excel, and legacy project management software. In this competitive field, Adaptive stands out among notable names such as Briq, Beam, and MakersHub. While these companies also offer financial workflow automation tools, Adaptive has carved out a unique niche. Serving over 280 construction companies—including custom homebuilders, commercial general contractors, and real estate developers—Adaptive’s AI-driven document processing capability significantly differentiates it from competitors. This unique selling point has helped Adaptive to become an essential tool in the industry.Adaptive has focused on leveraging advanced technologies, which sets it apart from its competitors. By incorporating generative AI for document processing, the platform not only speeds up financial transactions but also reduces human error, making it highly reliable. The company’s ability to offer these advanced solutions to multiple client types—ranging from custom homebuilders to commercial general contractors—underscores its versatility and adaptability in solving industry-specific problems.Funding and Growth
Recently, Adaptive secured a $19 million Series A funding round led by Emergence Capital, bringing their total funding to $26.4 million. Other notable investors include Andreessen Horowitz, Definition, Exponent, 3kvc, Box Group, and Gokul Rajaram. This significant investment will be directed towards expanding their workforce from the current 29 to 45 employees by the end of the year. This infusion of capital will not only accelerate their growth but also allow Adaptive to enhance its existing technology stack. The funding is a testament to the investors’ confidence in Adaptive’s potential to revolutionize construction financial workflows.The new funding will enable Adaptive to invest in further technological advancements, enhancing the platform’s capabilities and features. By expanding the team, Adaptive aims to provide better customer support and faster implementation of new features. The additional resources will also allow for more extensive market penetration, targeting a broader range of construction companies and subcontractors. This aggressive expansion and technology enhancement will help secure Adaptive’s foothold in the increasingly competitive construction technology market.Future Plans
Adaptive’s immediate focus is on acquiring subcontractor clients to broaden its reach within the construction industry. The company also has plans to monetize various integrated payments, insurance, and payroll functions in the medium term. Given Adaptive’s comprehensive management of its customers’ financial workflows, there are numerous opportunities for embedded finance. This is particularly relevant for SMBs, which often lack the financial expertise or resources to handle complex financial operations independently.By targeting subcontractors and small- to medium-sized businesses, Adaptive is positioning itself as an inclusive platform that can address the needs of a diverse client base. The company’s strategic plans to monetize integrated financial functions could open new revenue streams, making Adaptive not just a tool but a complete financial solution for the construction industry. Their emphasis on embedded finance aims to make financial services more accessible and seamless, addressing the industry’s chronic inefficiencies effectively.Addressing Immediate Issues
Adaptive’s solutions come at a crucial time for the construction industry, which is often considered to be lagging in digital transformation. By leveraging advanced technologies, including generative AI, Adaptive simplifies complex financial transactions. This reduction in complexity substantially shortens the time it takes for construction companies to receive payments. With quicker payment cycles, companies can manage cash flow more effectively and reduce the financial strain caused by delays.In an industry where cash flow is critical for maintaining operations, the benefits of Adaptive’s platform cannot be overstated. Faster payment cycles mean businesses can reinvest sooner, pay suppliers promptly, and reduce borrowing costs—all of which contribute to overall financial health. As more companies adopt Adaptive’s technology, the industry as a whole may see improvements in project timelines, cost management, and stakeholder satisfaction. The company’s role in driving digital transformation is crucial for modernizing an industry that has long been bogged down by outdated processes.Broader Implications and Challenges
The construction industry grapples with several well-documented issues: slow payments due to extensive paperwork, approval processes that span multiple stakeholders, unforeseen delays, and significant cost overruns. Adaptive addresses these challenges by targeting small- and medium-sized businesses, providing them with specialized solutions. This focus aligns with market trends emphasizing the need for robust financial tools for SMBs, which are often underserved in financial services.Addressing the broader implications, Adaptive’s approach of focusing on SMBs aims to democratize advanced financial management tools. By making these tools more accessible to smaller players, Adaptive enables these businesses to punch above their weight, effectively leveling the playing field. Moreover, Adaptive’s AI-driven approach to financial management helps mitigate human errors and inefficiencies that have traditionally plagued the construction industry. This not only aids in faster project completion but also ensures better budget management and resource allocation.Adaptive’s Unique Offerings
One of Adaptive’s standout capabilities is its auto-processing of documents like insurance agreements and payment requests through AI. This innovation drastically reduces manual errors and enhances operational efficiency. By automating these crucial aspects of financial management, Adaptive ensures timely payments, benefiting all stakeholders involved in a construction project. This unique offering clearly sets Adaptive apart from other players in the market like Briq, Beam, and MakersHub.Adaptive’s focus on leveraging AI for document processing acts as an effective remedy for traditional paperwork bottlenecks. As the platform continues to evolve, it promises even more advanced features that could revolutionize how financial workflows are managed in construction. This will pave the way for more streamlined operations and enhanced productivity, giving companies the competitive advantage they need in a challenging market. With Adaptive at the helm, the construction industry stands poised for a significant shift towards more efficient and reliable financial operations.Construction Financial Ecosystem
The construction industry is widely known for its notoriously slow payment processes, with companies often waiting two to three months to receive funds. This sector features a complex payment network and unexpected cost overruns, which became especially noticeable in 2023. That year, delayed construction contract payments soared to an alarming $273 billion, accounting for 14% of the total project expenditures.Recognizing a significant opportunity to solve these delays, Matthew Calvano, Henry Bradlow, and Francisco Enriquez founded Adaptive in 2021. Their startup aims to streamline financial operations specifically for general construction contractors by reducing ‘back-office’ inefficiencies. Adaptive’s approach addresses the industry’s fragmented payment systems and seeks to foster quicker and more reliable payment cycles, thus helping to mitigate the financial strain caused by extensive payment delays.Adaptive’s innovative solutions could potentially reshape the construction industry’s financial practices, ensuring smoother transactions and reducing the economic burdens on contractors. With the rise of Adaptive, general contractors may finally see an end to the long-standing payment delays, allowing for more efficient project management and financial stability. In a landscape where time is money, Adaptive’s contributions are poised to make a significant impact, not just for individual companies but for the industry as a whole.
