We are delighted to announce that Norwest is leading a Series A financing round of $12 million for Ediphi, an innovative provider of cloud-based solutions estimating construction costs in commercial construction.
Ediphi perfectly fits our investment model: partner with next-generation companies in markets where they can disrupt incumbent providers. The preconstruction market consists largely of customers who use minimally adequate spreadsheets or are served by incumbent software providers whose legacy products lack innovation. Ediphi is addressing these shortcomings to increase efficiency in preconstruction and grow revenue for its customers.
Major Opportunities for Improvement
Preconstruction has huge opportunities for improvement, as most estimates today are done with suboptimal tools. Roughly three-quarters of estimators are using simple, manually intensive spreadsheets, while about a quarter use some form of aging, on-premise software.
Collaboration – which is essential in the preconstruction process – is difficult or impossible with these approaches. That’s because preconstruction workflows are typically kept on disparate spreadsheets. And legacy desktop software provides no centralized location to ensure that all information and analysis flow seamlessly to the final proposal.
Not only are these approaches (especially spreadsheets) highly vulnerable to errors, but they only support a limited number of variations in the estimate. As you can imagine, this severely hampers an estimator’s ability to explore options with contractors and developers.
We looked at more than 50 construction software companies before deciding to work with Ediphi. Our due diligence confirmed it has the ideal mix of senior leaders with domain expertise, a proven solution, and enthusiastic early customers.
The Ediphi Difference
Three elements of the Ediphi solution especially impressed us.
First, it is a pioneer in providing a cloud-based preconstruction estimating solution that enables collaboration among all parties and minimizes the potential for lost or outdated data.
Ediphi is a pioneer in providing a cloud-based preconstruction estimating solution that enables collaboration among all parties and minimizes the potential for lost or outdated data.
Second, Ediphi connects preconstruction workflows and data from conceptual estimating all the way to buy-out in a single environment. This dramatically streamlines and accelerates the bidding process and reduces the chance of errors.
Third, Ediphi provides one of the broadest sets of capabilities, integrating data sheets, unit mixes, rooms, and systems. This simplifies the estimation process while providing the configurability to create high-level assemblies even for the largest-scale projects.
Ediphi provides several benefits over manual or on-premise software methods, including:
- Much shorter estimation times (as much as 90 percent faster)
- Optimized revenues, thanks to an enhanced ability to model many more options
- Higher margins, enabled by the greater efficiency and accuracy of preconstruction bidding
- Close collaboration among all interested parties
Ediphi is also targeting mid-market and enterprise segments, which have a multi-billion-dollar global TAM.
The Value of Enduring Relationships
Norwest’s relationship with Ediphi’s CEO and co-founder, Dustin DeVan, goes back to 2012 when Dustin entered a pitch contest. His startup, BuildingConnected, developed a cloud-based preconstruction bidding tool. The target market was an environment he knew well, having worked for several years in the construction industry. Norwest Partner Sean Jacobsohn – who started his career in real estate – was one of the judges and cast his vote for Dustin. He won.
Sean made the mistake of not investing. Nonetheless, the two stayed in touch over the years. BuildingConnected became a success and was acquired by Autodesk in 2019, after which Dustin devoted himself to investing in, and advising, startups.
Still intrigued by the potential for improving preconstruction bidding, Dustin teamed up with Mike Navarro, a veteran of 20 years in the construction industry. Navarro had developed estimating software for Suffolk Construction, one of the nation’s leading contractors. Dustin and Mike purchased the intellectual property behind that software and started Ediphi.
When Dustin was looking for Series A funding, we knew Norwest should partner with him. He has a powerful combination of domain knowledge, industry reputation, entrepreneurial energy, and operating experience.
Working with Dustin and Mike is a management team whose experience and cohesion are rare in a company at this early stage. Danielle Sandoval, VP of Product; Dani Storlie, VP of Design; Zach Azar, VP of Engineering; and Sarah DeBaca, Director of Customer Success, collectively have decades of experience in applying innovative technologies to the construction industry.
During our due diligence, customers told us they were impressed by the elegant interface of the Ediphi platform; the efficiency and security of a cloud-based solution; enhanced collaboration; the broad range of features on a single platform; and the expertise of the management team.
Norwest is excited about the future for Ediphi for several reasons:
- Early-mover advantage with a cloud-native solution
- Proven benefits and excellent ROI for customers
- Experienced management team with relevant domain expertise
- A large and growing market largely untapped
In more ways than one, Ediphi is building the future.
