Building or renovating a house is a major undertaking, but one of the most daunting tasks is obtaining construction permits. The process can be riddled with obstacles, causing frustration, delays, and additional expenses for any project.
“We think of it kind of like a TurboTax for construction permitting since it handles everything from upfront research, application, permit preparation, submission, monitoring, common response and coordination, all the way through to permit issuance.” – Francis Thumpasery
In response to this challenge, the startup world has seen a surge of companies dedicated to streamlining the permitting process. One such company, PermitFlow, has recently received a significant amount of funding to further develop their solution.
Founded by Y Combinator alumni, PermitFlow has created an “end-to-end” workflow and automation software designed to handle all aspects of permitting. Their goal is to simplify the process from start to finish, much like how TurboTax simplifies tax preparation for individuals and businesses.
Today, the Milpitas, California-based startup is proud to announce that it has raised $31 million in Series A funding, with Kleiner Perkins as the lead investor. This comes just over a year after they raised $5.5 million in seed funding, led by Initialized Capital. Initialized also participated in this latest round, along with other key investors such as Y Combinator, Felicis Ventures, Altos Ventures, and various angel investors.
Founded in 2021, PermitFlow participated in Y Combinator in early 2022. While the company’s founders have not disclosed their valuation, they have shared that it was an “up” round. Revenue figures are also being kept under wraps, but they did reveal that their annual recurring revenue (ARR) has grown over 20 times in 2023 compared to the previous year.
PermitFlow primarily works with general contractors to make the permitting process less painful. They currently have multiple customers subscribed to their services, including Red Tail, Urban Moment, and Wright Construction. While their largest presence is in California, Florida, and Texas, they are actively working to expand nationally.
“What we’re trying to do through our software is to provide [general contractors] with more speed and consistency. So they not only have a faster turnaround, but more predictability around it,” explains co-founder and CEO Francis Thumpasery. “It allows them to give their customers more accuracy in terms of what they can expect.”
But PermitFlow is not limited to the residential real estate industry; they also serve commercial clients. Their ultimate goal, however, is to make housing more affordable by reducing the time it takes to obtain permits.
“By making permitting faster and more reliable, it reduces the return profile you need to make a construction project housing project work. And it also reduces the direct cost because you have lower materials management cost and you have lower subcontractor management costs.” – Francis Thumpasery
Thumpasery believes that their software can help make a significant impact in the housing market. By making the permitting process more efficient, they can lower the overall cost of housing and make it more affordable for everyone. This dedication to their mission has earned them recognition as a 2023 Ivory Prize co-winner in Public Policy and Regulatory Reform.
In addition to working with general contractors and developers, PermitFlow also collaborates with software vendors that provide platforms for municipalities. These vendors help streamline the digital permitting process, which has become increasingly important since the onset of the COVID-19 pandemic.
“We interact with those software platforms, versus interacting with the municipalities directly.” – Francis Thumpasery
PermitFlow sees a vast opportunity in this market, as many municipalities still rely on manual and labor-intensive processes. They hope to transform the industry through their technology and make a positive impact on the construction world.
As the company continues to grow, they plan to incorporate LLMs (language learning models) into their product. These models will help users better understand the complex requirements for permits and guide them through each step of the process. They also plan to scale their software architecture to cater to different regions, a skill that co-founder Sam Lam honed while working 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.” – Josh Coyne, Kleiner Perkins Partner
Other startups in this space, such as Pulley and GreenLite, have also recently received funding to help streamline the permitting process. With PermitFlow leading the charge, it’s clear that the industry is ripe for disruption and improvement. And with their focus on making housing more affordable, it’s evident that PermitFlow’s impact will extend far beyond the construction world.
