Construction projects typically require tons of paperwork and coordination between various stakeholders. Toronto-based Part3 set out to simplify the administration part of the process by bringing all documents and collaboration to a single platform, targeting architects and designers to start.
Founded in 2020 by a team with experience working in tech and construction, Part3 has now closed $2.8 million CAD in seed funding to enhance its platform and expand it to more players across the industry.
“The vision is bigger. The vision is bolder. We’re viewing ourselves now as having an opportunity … to be an operating system that can connect everyone in construction.”
– Jack Sadler, Part3
In an exclusive interview with BetaKit, Part3 co-founder and CEO Jack Sadler said the startup has since found product-market fit with a core group of architecture, engineering, and design firms, and now plans to move into serving owners and contractors, while also embedding deeper analytics and more automation into its software.
“The vision is bigger,” Sadler said. “The vision is bolder. We’re viewing ourselves now as having an opportunity not only to make construction faster for designers but … to be an operating system that can connect everyone in construction.”
Part3’s all-equity seed round closed earlier this month and was led by Chicago Ventures with participation from fellow new investors including Toronto-based Graphite Ventures, Levelset founder Scott Wolfe, Rubikloud founder Kerry Liu, and investor and Levelset board member Bart Swanson.
The financing, which also saw follow-on support from Capital Angel Network, brings Part3’s total funding to over $3.4 million CAD, including $625,000 in pre-seed capital from 2022. Per Sadler, Part3’s latest round came at a $9.5 million pre-money valuation.
“We are very excited for a platform built to serve architects and engineers in the same way that Procore is purpose-built for [general contractors],” Chicago Ventures partner Jackie DiMonte told BetaKit.
Wolfe knows the industry Part3 serves well—he’s responsible for one of the largest construction-tech success stories in recent memory. As founder and CEO, Wolfe built New Orleans-based construction-payments firm Levelset and sold it to Procore in 2021 for $500 million USD.
According to Wolfe, construction administration is critical, touches nearly every project stakeholder, and impacts everything from bidding to changes, dispute resolution, and payment. But despite its importance, he told BetaKit that existing tech in the construction admin space—particularly solutions for design firms—“leaves so much wanting.”
As to why he chose to invest in Part3, Wolfe said, “I love the opportunity for this product category, how the founders came into the problem and developed a passion for it, and how much value Part3 users are already getting out of it.”
Sadler claims that Part3 has now proven it can work with some of the largest construction projects in North America. Part3’s clients range from large public companies developing massive infrastructure initiatives worth billions of dollars, like the City of Vancouver’s new subway expansion, to single-person firms.
“It’s been really great to see that the value proposition has gotten to the point where it resonates with big and small [firms],” Sadler said. “That’s definitely been the key to what’s unlocked a lot of success this year.”
DiMonte described Part3’s growth rates to date as “first-rate.” While Part3 is still mainly serving architecture firms, Sadler said the startup is beginning to see other stakeholders those architects are working with also using its platform.
When Part3 set out to secure fresh financing this time around, the company faced a much different VC fundraising environment fuelled by high interest rates.
“Metrics that no one cared about last time were suddenly top of mind in the first round of meetings,” Sadler said. “People actually cared about your margins, people actually cared about your burn rate.”
As Part3 navigated these conditions, Sadler said one factor benefitted the budding construction-tech firm: its focus on a legacy industry.
“When you’re in a peak pullback-slash-recession, the really sexy metaverse and blockchain and generative AI stuff is a little [more] high-risk and less appealing, so being able to say that we’re modernizing and digitizing an old, outdated industry is actually a super appealing value-proposition.”
Sadler said that the design firms that Part3 caters to tend to be “the canary in the coal mine” and the first to feel any sort of pullback in construction activity. So far, Sadler said there has not been a drop during the economic downturn. What there has been, however, is a “reallocation of capital” from segments like real estate towards infrastructure projects like new schools, community centres, and hospital expansions.
As an industry-agnostic platform within construction, Part3 is capable of weathering these sorts of shifts, Sadler said. He argued that the construction sector overall is “pretty recession-proof,” adding that the types of projects being built might just vary based on the economy. Given this, some firms using Part3 are doing well as others struggle, depending on where their focus lies.
For her part, DiMonte believes Part3’s ability to serve multiple project types “bodes well” for the startup.
“It’s been really great to see that the value proposition has gotten to the point where it resonates with big and small [firms].”
– Jack Sadler, Part3
Part3 plans to invest its latest funding in product development, as the startup looks to double its 10-person team over the next year.
To date, Sadler claimed the company has been able to expedite the construction administration process by facilitating collaboration between stakeholders. Next on its to-do list is adding more automation to its platform, and laying on deeper analytics and generative artificial intelligence (AI).
“Architects, on any given day, have to become lawyers, accountants, project managers—they cover so many ranges,” said Sadler. “We want to take care of all of that, bucket it into administration that we can automate away, and get your focus back on your profession.”
Sadler noted that much of the work in design and architecture is document-heavy reviews, which can take days and require approval from multiple teams. The CEO sees room to make this process less time-consuming and expensive by providing guidance and advice using AI.
“We’re never going to replace [those designers], but we’ll augment them to the place where they can take on more projects and they can stay focused on design and use our assistant to help them with that,” said Sadler.
Feature image courtesy Part3.