a16z leads $14.25 million Series A for Mosaic Building Group
Proptech startup Mosaic Building Group has hauled in a $14.25 million Series A round of funding led by Silicon Valley VC giant Andreessen Horowitz, also known as a16z.
The Series A round, raised in March but just announced on Wednesday, brings total funding for the tech-focused construction startup to $24.75 million. The financing included participation from a slew of other high-profile backers, including Peter Thiel’s Founders Fund, Joshua Kushner’s Thrive Capital, Eric Schmidt’s Innovation Endeavors, Greylock Partners and Slow Ventures. A number of angels also put money in the deal, including Opendoor CEO Eric Wu and Michael Milstein of Milstein Properties and Emigrant Bank.
In conjunction with the funding, Mosaic said it has also forged a $100 million partnership with Arizona homebuilder Mandalay Homes. The deal helps bring the startup’s revenue from $2 million in contracted, committed and cumulative revenue at the start of 2019 to over $100 million today, according to the company.
Phoenix-based Mosaic says its technology automates the construction planning process. The software is designed to shorten build times, cut costs, reduce materials waste and improve construction quality for homebuilders. At its core, Mosaic’s technology digitizes standard construction plans and identifies the best way for homes to be built onsite, using the same materials, workers and procedures as traditional homebuilders do.
“We’re focusing much more on the field operations as opposed to the business processes that surround the construction world like contract management or invoicing,” Salman Ahmad, co-founder and CEO of Mosaic, told FinLedger.
The investment is not the first by a16z in a construction tech startup. It also put money in Doxel, an artificial intelligence and computer vision-based system that aims to deliver significant productivity increases to commercial construction projects.
But in the case of Mosaic, Andreessen Horowitz investor Anish Acharya said: “There is a huge opportunity for technology to disrupt and streamline the real estate industry, creating cost efficiencies that benefit virtually every stakeholder in the homebuilding ecosystem — including homeowners. The Mosaic platform contributes to a future in which the homes are both more affordable and better for families across the country.”
Under the $100 million partnership, Mosaic and Mandalay have committed to building at least 400 homes over the next 24 months in the Prescott and Flagstaff areas of Arizona. That’s a conservative estimate, though. Dave Everson, owner and CEO of Prescott-based Mandalay, said he hopes the partnership enables the construction of 500 homes over that same 24-month period.
The $100 million figure represents the construction value of the minimum 400 homes that are on the drawing board.
“We’re looking to Mosaic to take us to that next level, with our same trade base and with their technology tools,” Everson said.
Mandalay has ramped up its sales efforts in conjunction with the new Mosaic partnership, he said.
“In our world, you have a finite number of homes you can build in your community or area. We want the market share of that, so we want people to want to work with us, we want them to be profitable and we want everybody to be proud of the product at the end of the day, and this partnership helps us do that,” Everson said.
This newly minted collaboration builds on a two-year relationship between the two companies that already has brought nearly 70 homes to Prescott. As part of the new collaboration, nearly 80 Mandalay workers are being assigned to Mosaic, boosting the startup’s general contracting and construction capabilities.
Today, Mandalay is Mosaic’s largest customer. The startup launched in 2015 and now employs about 40 people.
“It’s easy to say this and talk is cheap on this point, but we really have been mission-driven in terms of trying to do our work, being able to create places that people love and making those places widely available,” Ahmad said. “We feel that construction is a rate-limiting element to be able to do either one of those.”
Ahmad said he wants Mosaic to be part of “an ecosystem that can really address some of the issues that we’re having with housing in this country.”