Agora raises $33M to automate procurement in the construction industry
Agora Systems Inc., a startup that automates procurement in the construction industry, today announced a $33 million funding round led by Tiger Global Management LLC.
The Series B roundinvestment brings the company’s total funding to over $44 million amid a period of what its chief executive says is extreme growth.
“We’re hiring like crazy right now,” said CEO Maria Rioumine, the company’s 29-year-old co-founder. Agora claims 760% revenue growth over the past year and a sixfold expansion in its customer base across 30 states.
Agora targets an industry that has stubbornly resisted automation. Construction is a $10 trillion global industry that employs more than 200 million people but annual productivity has barely budged for 70 years, according to McKinsey & Co.
Technology spending as a proportion of revenue in construction is about half that of all industries and the mechanics of large construction projects are a mystery to most people. “We’ve seen that the problems that exist for trade contractors have historically been overlooked,” Rioumine said. “We saw a huge disconnect between the field and the office.”
Procurement of materials for construction sites is typically done with paper, phone and fax, Rioumine said. Agora offers a way to order and track materials, automate data entry and consolidate supply chain members on a single platform.
“We focus specifically on trade contractors, making it easy for them to get the materials they need when they need them,” Rioumine said. The company is first focusing on electrical contracting and plans to expand into other construction areas.
The application, which is sold on an unlimited-use annual subscription, accesses a catalog of more than 400,000 products. Contractors can use desktop and mobile applications that contractors to find materials and submit accurate data to requisition agents who issue purchase orders.
The software allows for pricing comparisons, generates requests for quotes and hold-for-release orders, which enable contractors to lock in prices in advance and draw down deliveries over time. It also manages onsite deliveries with line-item functionality to check materials against orders and rectify discrepancies.
Purchasing agents and field foremen work from a common database so changes are visible immediately. “Today that’s all done manually and there may be 10 different foremen on a site,” Rioumine said.
Agora says it has been able to save customers an average of $170,000 in labor time alone in the field and about 75% of purchase order processing times in the office. One unnamed customer saved about $30,000 on a single order by finding an alternative supplier that was running a promotion, Rioumine said.
John Mraz, CEO of Cleveland-based Einheit Electric Construction Co., said the company’s performance has lived up to its promise. “Our foremen and purchasing agents have a single platform that’s as easy to use as Amazon to make sure the right materials arrive on-site and on time,” he said. “It’s easier, faster, more accurate and the digital experience especially appeals to younger leaders.”
The software has helped Einheit manage growth from about 15 electricians to more than 120 over the last seven years, Mraz said. “Agora saves us time and money and makes the procurement process easier than ever,” he said. “Our guys in the field and the project managers in the office no longer have wasted phone calls and errors have been reduced. We’ve become more collaborative and have reduced unnecessary follow-up so we can focus on our critical work.”
Further evidence of the likelihood that Agora has tapped a significant opportunity is the fact that the company wasn’t actively looking to raise money. “The round was entirely unexpected because we weren’t fundraising,” Rioumine said. “A few investors approached us.” She said the company plans to move next into mechanical contracting and expand into inventory management.
Other investors in this round include Eight Partners VC LLC, real estate investment firms Tishman Speyer Properties LP and Lefrak Organization Inc., former Yahoo! co-founder Jerry Yang, Michael Ovitz and Eventbrite Inc. co-founder Kevin Hartz.
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