Anyone who has ever tried to build or renovate a house knows the pain of obtaining construction permits. Challenges in receiving permits not only add frustration, but also time and expense to any project.
It’s no surprise then that the startup world has seen a flurry of startups focused on streamlining the permitting process. The latest to receive venture funding is PermitFlow, a Y Combinator alum that has developed “end-to-end” workflow and automation software that aims to “take care of permitting from soup to nuts,” according to its founders.
“We think of it kind of like a TurboTax for construction permitting since it handles everything from upfront research, application, permit preparation, submission, monitoring, comment response and coordination, all the way through to permit issuance,” said co-founder and CEO Francis Thumpasery.
Today the company is announcing it has raised $31 million in Series A funding led by Kleiner Perkins, TechCrunch has learned exclusively. The financing comes just over a year after it raised $5.5 million in seed funding led by Initialized Capital. Initialized also participated in the latest round, along with Y Combinator, Felicis Ventures, Altos Ventures and a number of angel investors. Founded in the fall of 2021, PermitFlow participated in Y Combinator in early 2022.
While the Milpitas, California-based startup’s founders declined to reveal valuation, Thumpasery said it was an “up” round. They also declined to reveal hard revenue figures but said PermitFlow saw its ARR increase by “over 20x” in 2023 compared to the year prior.
More affordable housing
PermitFlow primarily works with general contractors to help make the permitting process less painful. It has dozens of customers using PermitFlow on a subscription basis, including Red Tail, Urban Moment and Wright Construction. Its largest footprints are in California, Florida and Texas, but it operates in municipalities across the country with the plan of systematically expanding nationally.
“What we’re trying to do through our software is to provide them with more speed and consistency. So they not only have a faster turnaround, but more predictability around it,” said Thumpasery. “It allows them to give their customers more accuracy in terms of what they can expect.”
PermitFlow doesn’t just focus on the residential real estate industry. It also works with commercial clients. But one of its biggest goals is to help make housing more affordable by helping shorten the time it takes to get permits.
“By making permitting faster and more reliable, it reduces the return profile you need to make a construction project work,” Thumpasery told TechCrunch. “And it also reduces the direct cost because you have lower materials management cost and you have lower subcontractor management costs.”
“That’s good for the home builder because it allows them to operate more profitably but that also lowers the overall market cost to build housing, and that ultimately reduces the cost of housing and makes it more affordable,” he added.
So far, PermitFlow has helped permit over 5,000 units of housing and the company plans to continue to prioritize its mission to make housing development more affordable, said Thumpasery. Those efforts led to the company being honored as a 2023 Ivory Prize co-winner in Public Policy and Regulatory Reform.
COVID and LLMs
PermitFlow also works with different vendors that provide software to municipalities.
“A municipality today will have a digital permitting process. This has been a big step change since COVID, and that has been a big catalyst for what allows companies like us to be successful,” Thumpasery told TechCrunch. “We interact with those software platforms, versus interacting with the municipalities directly.”
The opportunity, PermitFlow believes, is massive. “This is largely a green field legacy market. When we’re engaging with general contractors and developers, 99% of the time we are engaging with folks that are using really manual, error-prone and nontransparent processes to pull their permits. That’s the world we live in…and the one we’re trying to transform.”
The company is working to embed LLMs (language learning models) throughout its product to decipher “obscure” requirements and help users understand what permits they need depending on their given project, how to best prepare and submit them, and to also track the process. It also plans to scale its geographically localized software architecture, something the company claims co-founder Sam Lam did at Uber.
“No longer do construction professionals need to try and decipher obscure municipal websites/requirements and suffer through back-and-forth whack-a-mole in the form of municipal office comments,” said Kleiner Perkins Partner Josh Coyne. “PermitFlow shoulders all of this complexity in a single, centralized platform.”
Other startups in the space that have recently raised capital include San Francisco-based Pulley, which raised $4.4 million in seed funding in June 2022 to help advance on its goal to shorten the construction permitting process “from months to days.” In October, Austin-based GreenLite announced it had emerged from stealth with $8 million in seed funding. And, bootstrapped Austin-based Permits.com is another example of a startup tackling the problem.
Comment