The Slow Payments Problem in the Construction Industry

The construction industry is plagued by a significant slow payments problem. Studies show that construction companies often face delays in receiving payments, taking anywhere from two to three months on average. This issue is attributed to factors like delays, complex payment layers, and cost overruns.

The financial impact of delayed payments is substantial, reaching $273 billion in 2023, representing 14% of total project expenditures.

Adaptive: A Fintech Solution for Construction Companies

Adaptive, a fintech platform co-founded in 2021, aims to tackle the slow payments problem in the construction industry. Recognizing the inefficiencies in back-office processes, Adaptive provides tools specifically designed to simplify payments and accounting for general construction contractors.

Adaptive's platform streamlines payment workflows by automating financial management tasks, including budgeting, expense tracking, accounts payable, and electronic payments.

Construction companies can upload documents such as insurance agreements and payment requests in various formats (e.g., SMS, PDF) and leverage automation to approve requests and budgets.

Adaptive's Approach to Financial Management Automation

Adaptive leverages generative AI algorithms to automate the financial management and bookkeeping workflows unique to the construction industry.

The company's solution aims to replace the manual labor traditionally involved in financial management, which often relies on email, spreadsheets, file sharing, and financial features of legacy project management software.

Adaptive's Competitive Landscape

Adaptive faces competition from other fintech startups targeting the construction industry, including:

Briq, which offers similar financial workflow automation solutions.

Beam, a fintech platform focused on streamlining payments, invoices, and receipts for contractors.

MakersHub, which specializes in deciphering accounts payable data for construction companies.

Adaptive's Business Growth and Future Plans

Adaptive has established a strong business presence, boasting over 280 construction companies on its client roster, ranging from custom homebuilders and commercial general contractors to real estate developers.

The company's immediate growth strategy focuses on acquiring subcontractor clients by developing tailored products for this segment.

Adaptive plans to explore monetizing integrated payments, insurance, and payroll functions in the medium term, leveraging its existing customer base and financial workflow management capabilities.

Adaptive's commitment to embedded finance aims to serve underserved SMBs in the construction industry by offering comprehensive financial solutions.

Adaptive's Funding and Expansion

Adaptive recently closed a $19 million Series A funding round, bringing its total raised to $26.4 million. This funding will fuel the company's expansion plans, including increasing its workforce from 29 to 45 by the end of the year.