Before the opening bell rang on June 7, it took about 20 minutes for traders at the New York Stock Exchange to agree on a fair price for Textura Corp.'s initial public offering. The problem was a gap in supply and demand. Textura received preliminary orders for 72 million shares, but it had only 5 million to sell. Originally priced at $15, the stock jumped to open at $24 and is now trading at around $30 per share.
In less than 10 years, Textura's cloud-based software platform has become the industry standard for getting paid. Joining a small list of Chicago-based tech startups to go public (Groupon was the last local IPO, in 2011), the company raised $86.2 million to pay down debt and fund new ventures, including a push into global construction—a $7-trillion market.
Construction gets a bad rap as being sluggish when it comes to innovation, but Patrick Allin, chief executive officer and co-founder of Textura, says contractors have lacked important tools. "I don't think they are behind the curve. I just think the technology world hasn't really focused on building solutions that solve their real business problems," he says. "We're kind of early in that process."
Textura derives about 60% of its revenue from its payment system, which cuts out the face-to-face meetings and protracted negotiations needed to close out a bank draw. Paying contractors the old-fashioned way "adds a high degree of frictional cost and introduces an incredible amount of execution risk that really doesn't need to be there," says Geoffrey Heekin, executive vice president and managing director of Aon Risk Solutions.
Unlike other construction software that tracks accounting, cash flow and bills, Textura's niche is the actual payment. General contractors pay a setup charge for each project, and subcontractors pay a small fee to use the system. Founded in 2004, Textura initially came up against a brick wall as some contractors didn't want to pay for the added efficiency. When technological products such as smartphones became everyday business tools, Textura's model took hold.
"It took them awhile to get general acceptance," explains Marj Weber, chief financial officer for plumbing subcontractor Irontree Construction Inc. in Mesa, Ariz. She adds that construction "got dragged kicking and screaming into the 21st century."
Today, Textura is a $21.7-million-a-year company, with 41 of ENR's top-100-ranked general contractors on its system. Textura is poised to take advantage of an upswing in global construction, growing 5.2% a year and reaching $15 trillion annually by 2025, estimates Global Construction Perspectives. The challenge will be finding clients that appreciate the transparency that Textura brings to a project. "We think that eliminates 40% of the global construction market," says Allin.
