Vancouver-based BuildDirect has raised $36 million CAD in new financing, and converted $19 million of interim financing provided during CCAA proceedings for a total raise of $53 million led by Mohr Davidow Ventures.
New and existing investors that participated in the round include Fidelity Investments Canada, Pelecanus Investments, Lyra Growth Partners, and Beedie Capital. BuildDirect had filed for protection less than five months ago, and as of March 22 this year, the company implemented a plan of compromise and arrangement.
All voting secured noteholders and nearly 95 percent of voting unsecured creditors approved the plan; secured creditors agreed to convert $74 million CAD of debt to equity, with the result that only $5 million CAD of debt remaining at emergence.
The company said it will continue to service homeowners, but will shift its focus to professional contractors.
“In addition to reducing our cost structure and strengthening our balance sheet to support our long-term business objectives, we have a renewed focus on professionals which include contractors, builders and interior designers,” said Dan Park, CEO of BuildDirect. “Today marks a defining moment for BuildDirect and I am confident customers and sellers alike will soon recognize the signs of a newly energized and well capitalized business poised for success.”
BuildDirect’s marketplace targets the home improvement industry, allowing homeowners to purchase products for commercial and home improvement projects. The company said it will continue to service homeowners, but will shift its focus to professional contractors, who are often a product sourcing resource for homeowners.
In October 2017, former BuildDirect CEO and co-founder Jeff Booth stepped down from his role after 18 years with the company, and in a blog post cited challenges with scaling the platform, and the decision to bring on more debt to tackle this challenge. But taking on that debt also meant tensions with debt holders: “Their understanding of growth is different; their timelines for return are different; their appetite for risk is different,” Booth wrote at the time. Park, who joined the company as COO, took Booth’s place.
According to the Globe and Mail, under Park, cash sales, net cash receipts, and net cash flows in BuildDirect’s first 15 weeks under court protection exceeded initial management forecasts. Operating costs were 20 percent lower than the $16 million CAD forecast.
“We are very bullish on the shift towards professional contractors,” said Katherine Barr, general partner at Mohr Davidow Ventures. “BuildDirect is pursuing a very large market opportunity and we believe that the company’s assets, capabilities, and executive leadership uniquely position the Company to be extremely successful moving forward.”
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