Siteline: Attacking the Payments Problem in Construction
As repeat investors in the construction technology space, we have been vocal about the opportunities to build valuable companies in the category. Vertical SaaS solutions that unlock productivity, automate repetitive manual processes, and digitalize workflows (such as Menlo portfolio companies Fieldwire, Hover, and OpenSpace) are pushing construction into the modern age. However, I feel strongly that financial fragility remains one of the biggest unsolved problems for this industry. Construction is a sprawling and complex business pressured by working capital issues and significant counterparty risks. The industry needs better tools and processes to manage these businesses’ financials and liquidity, which would, in turn, provide more stability across the system.
A significant driver of instability in the sector is a payments problem. Despite being one of the world’s largest industries, construction has earned the dubious honor of being slowest to pay, according to research from PWC, which reports that it takes an average of 83 days to receive payment. Getting paid is a particularly thorny problem for the trade contractors that comprise a meaningful segment of construction’s labor force. Trade contractors, also known as subcontractors, typically pay for labor and materials before getting paid, shouldering substantial risk and operational complexity. The fact that the billing process remains very manual creates an opportunity for error; every mistake can cause a delay in payments and strain the business.
Siteline, our newest portfolio company, aims to increase financial certainty within construction. Their initial offering is a payment platform designed to meet the specific needs of trade contractors (i.e. subcontractors). With Siteline, trade contractors can easily compile accurate payment applications, manage compliance documents and lien waivers, and monitor payments. The tool is customizable and handles complexities across many different owner requirements and project delivery methods. Siteline’s customers report significant benefits to the platform: They get paid faster on a substantial portion of jobs, accelerate internal billing processes by up to 6X, and improve collaboration across project and finance teams.
Like many of our SaaS portfolio companies, Siteline fits the profile of a trifecta business. As defined by our vertical and departmental SaaS thesis work, three qualities define a trifecta business:
- A clear wedge to modernize antiquated but critical workflows
- The opportunity to generate proprietary data, becoming a system of record
- The potential to leverage that data and extend laterally into multiple applications & workflows, driving network effects
Siteline’s wedge is to help subcontractors manage one of their most pressing problems: their liquidity. From this starting point, we believe Siteline has the potential to become an incredibly powerful and intelligent cockpit for business operations and increasingly a central node that connects subcontractors to general contractors, suppliers, and other counterparties within the ecosystem. This central position creates an opportunity to build “reciprocal gateways” for these other constituents, driving network effects and monetization across the ecosystem. We believe Siteline will be a prominent player in a massive market, creating real value for everyone who touches the platform.
To sell into an established industry requires particular DNA. Built from the ground up to address construction’s payments crisis, Siteline was founded by someone who takes the problem personally and has the technical chops to solve it. Raised by a father who was a subcontractor, Co-founder and CEO Gloria Lin is a payments expert who worked at Apple in the earliest days of Apple Pay and then at Stripe as their first PM. She’s now taking everything she’s learned to date and applying it to a complex problem. Gloria’s co-founder and partner in this mission is Siteline CTO Joel Poloney. Joel is a successful serial entrepreneur whose earlier startups were acquired by Google and Zynga. With each business he builds, Joel is fueled by a desire to solve complicated problems through automation. Combined, Gloria and Joel are the product-driving founding team this industry needs.
Ultimately our decision to back Siteline comes down to three things:
- A market opportunity we like (payment operations/ financial stability is one of the main unsolved problems in construction)
- A business shape we like (Trifecta)
- And founders we like (they are product-focused and driven, among the best people we’ve met tackling inefficiencies in this sector)
As we consider the issues creating friction in construction, we see enormous opportunities for technology startups. We are in the early innings of construction’s evolution and believe the industry can only gain from new products and technologies that enhance productivity, cost efficiency, speed, and safety. We’ve already backed several promising startups and continue to look for the next great innovator. If that might be you, or someone you know, we’d love to hear from you.