Another startup we’ve been following — since late 2015 — is making big moves.
Rhumbix, the San Francisco-based developer of a cloud-based mobile workforce management solution, has received $7.35M in venture capital. It is the third portion of Series A funding for the young company founded by two U.S. Navy veterans, which will allow them to continue building their customer base in the Bay Area and worldwide.
The new financing, from a group of investors led by Blackhorn Ventures of Boulder, CO, comes as Rhumbix continues to show increasing value to investors. The company has now raised a total of $20.6M to support early product development and sales.
The Rhumbix program combines geospatial and budget data to track construction workers’ progress on tasks and task-related costs. It displays a rich array of real-time information for project managers, foremen and their crews, sending them continual updates that support quick planning decisions to improve workflow.
The startup’s co-founders Zach Scheel and Drew DeWalt saw the need for better on-the-ground construction site data while serving as Naval Engineers. CEO Scheel managed construction at a naval base in Djibouti during the Arab Spring uprisings. There, he became impressed with the military’s GPS-enabled Blue Force Tracker that gave oversight of 3,000 troops throughout North Africa. COO DeWalt served as an engineer on a nuclear submarine, observing the complex interactions of officers and crew at sea. The two later met at Stanford Business School, and met again in South America while managing construction projects in Chile.
They began working on what would become Rhumbix in 2013 and gained $1M in seed funding in 2014, backed by a large group of investors including Darren Bechtel (Brick & Mortar Ventures), Eric Chen (UJ Ventures), and Stanford University Engineering professor Ray Levitt. The seed funding allowed them to hire a full-time software engineer and helped them to introduce the software to a handful of large construction companies.
“A lot of foremen in the field use a little black book to take notes,” says Scheel. “We digitize this, feeding in cost codes and related budget data for supervisors and project managers to analyze productivity on-site.”
DeWalt explains that the software can cycle knowledge of what’s occurring, giving back data to managers and crew on how a project is going that day. “It’s with this democratization of information that our industry will get the kind of productivity gains that have eluded us for decades,” he says.
He affirms that in the high labor rate environment of the U.S., in which a journeyman is making $120 to $130 per hour, Rhumbix can save a builder some 3 hours per worker per week. “That’s a significant savings – the payback period we offer is a week,” he adds.
Building on initial success, Rhumbix received Series A funding in 2015 in a $6 million round led by investment firm Greylock Partners. This was followed in 2016 by $6.25 million in a second tranche of Series A funding from a group of investors led by Spectrum 28. Other notable investors include Glynn Capital, Grit Labs, Kiddar Capital, Harris Barton, and Ronnie Lott.
The funding has allowed them to build a team of 32 people, about half of whom are in product development and engineering including two with PhDs in data science. The rest of staff is devoted to sales and customer care. Scheel says their customers now include 7 of the ENR Top 20 contractors and that the program is now deployed on hundreds of project sites across eight countries.
“We’re seeing rapid uptake and adoption with our customers, which has led to ROIs ranging from 500-800%, achieved in one month,” he affirms.
The company’s clientele spans the industry from major construction firms to smaller family-owned contractors. “We have a strong value proposition for the average small contractor wanting to bring its management into the digital age,” says DeWalt.
Looking to the near-term, they anticipate receiving Series B funding in the next year, to continue building and expanding their product line.
“We’re continuing to develop products that save contractors money,” says Scheel. They’re working on software that will link clients to larger cloud-based datasets, deploying machine learning and AI to bring more insights to managers.
“We’re excited to see how far the construction industry has come in 3-4 years, as managers see the value-add of tech” says Scheel. “Now when we work with contractors, they see us as a way to reduce costs internally, they put us in their bid packages.”
“I think our industry is 2-3 years into the proverbial S-curve, getting close to that inflection point when technology will take off fast,” he adds.