Sebastian Molina Gasman

Colombia

Latin America and The Caribbean

Mexico

Access Usage Gap

Credit

Customer Centricity

Digital Financial Services

Enabling Environment

Fintechs

MSME/SME Finance

Small Business Owners

Underserved Groups

Alternative Data

Digital Payments

Financial Inclusion Strategy

Fintech

Impact Investing

Underwriting

Article

Video

Press Release

Licify

Most of Mexico’s people lack access to a formal bank account. Accion has worked in Mexico for decades to create a thriving and competitive financial sector that embraces innovation and protects its clients.

Despite being one of the largest industries in the global economy, the construction industry hasn’t kept up with technology’s advances. Construction companies procure over $250B in services from contractors each year, yet they rely on manual processes to allocate and manage contracts. This presents a large opportunity to digitize and optimize processes, leading to more projects and efficiencies for the small contractors that power the industry. Colombian startup <a href="https://licify.co/" target="_blank" rel="noopener noreferrer">Licify</a> is seizing this opportunity by helping small businesses bid for construction contracts, speeding up payments in the industry, and underwriting loans through its digital platform.

In Latin America, procurement processes in the construction industry remain largely analog. Contractors — 95 percent of which are micro, small, and medium enterprises (MSMEs) — regularly make bids over the phone, via email, or even through letters. As a result, these processes tend to be opaque and heavily dependent on interpersonal relationships. This not only makes it harder for smaller contractors to secure new projects, and thus grow their businesses, but also makes it impossible to capture data that can verify contractors' track records and capacity to take on new projects. Problems for MSME contractors don’t stop there, however. Once they win a bid for a project, they typically pay upfront for materials and labor to start construction, putting them in a vulnerable position as disruptions in their cash flow cycle will result in project delays.

To change this, Licify has launched a B2B procurement marketplace with embedded fintech offerings for small businesses in the construction industry. <a href="https://www.accion.org/how-we-work/invest/accion-venture-lab" target="_blank" rel="noopener noreferrer">Accion Venture Lab</a> is proud to partner with them on their journey to help construction MSMEs operate more efficiently and grow. We’re excited to invest in Licify as they:
<h3>Allow construction MSMEs to work on more projects, more often</h3>
Starting a project is particularly expensive for MSME contractors. Before they can even create an invoice, they need to pay for materials and human capital to execute a portion of the job. As a result, once a contractor secures a project, they often lay out large sums of money to kickstart it. Furthermore, given the unique risks inherent in construction, contractors are often unable to secure credit from banks and other MSME lenders to finance this initial cash outlay.

During conversations with contractors in Colombia, we found that this was one of the key pain points that prevented contractors from undertaking larger jobs, or working on additional projects, despite having the ability and capacity to complete them. One contractor recounted that he was forced to sell his own car every time he secured a contract, as this was the only way that he could obtain enough capital to pay for the drywall materials he needed to start working.

Through Licify’s platform, contractors can bid on projects tendered by construction companies, leveling the playing field to give them access to high-quality opportunities. Once a project is granted, Licify uses the data gathered on both the project and the contractor to advance payments and underwrite working capital loans. Through this access to capital, the amount of cash at hand no longer becomes a barrier to undertake a project and contractors can focus on execution.
<h3>Prevent cash crunches that disrupt projects</h3>
Once a project is started, cash flow cycles continue to be a challenge for MSME contractors. After issuing an invoice to the construction company, they typically wait two to four weeks to get paid. This can put them in a challenging cash flow position, as they rely on these payments to continue working on a project. Any delays or disruptions in the process puts their ability to maintain a project timeline at risk. In fact, cashflow delays were cited by Licify customers as the leading reason for project delays and cost overruns. In an industry where 80 percent of projects are delivered late and over budget, alleviating cash flow delays is a priority both for contractors and construction companies.

By plugging directly into the payment flow of construction projects, Licify provides contractors with flexibility on their payment schedules. As contractors finish a project, Licify can advance payments to better match their cash outflows, avoiding delays in payments to workers and enabling the purchase of additional materials. Licify then directly collects payments from the construction companies allowing contractors to focus on executing the project and not on managing multiple receivable schedules.
<h3>Modernize construction procurement technology</h3>
Licify is reinventing how contractors access construction projects. The platform connects builders with the best contractors for their projects by opening up bids to all qualified service providers. To do this, Licify's marketplace presents contractors with ongoing construction projects to bid on. These are posted by builders, who can use Licify to compare potential contractors for portions of a project. This process provides construction companies with data that was previously difficult to obtain, such as a contractor’s operational bandwidth and track record with similar projects while allowing contractors to access new opportunities. This use of technology brings operational efficiencies for both sides of the market and democratizes access to high-quality opportunities.

Once Licify matches contractors to a project, it helps builders manage the payment flow to their small contractors with a suite of digital tools to oversee project progress and manage documentation. With projects often involving over a hundred contracts, Licify frees up valuable administrative time that could be better spent on other parts of a project. So far, this value proposition has resonated with the top-building companies in Colombia, with over 50 clients signing multi-year agreements and tendering contracts with a yearly value above $1B USD to small contractors.
<h3>Support small businesses across Latin America</h3>
Licify is consolidating its presence in Colombia and growing its payment and lending services in the region. Today, Licify has already registered over 16,000 small contractors on its platform who are generating over 2,500 bids per month on active projects. With this new funding, the company plans to expand into Mexico, where they have already secured their first client, in the near future. We believe Licify addresses a key pain point we’ve seen across the region, and we’re excited to work with Licify as they move into new markets.

This is Accion Venture Lab’s first investment in the construction tech industry. We feel confident working with a company with such a strong product-focused mindset and led by two industry veterans, Fernando Olloqui and Pedro Celia, who have worked as both builders and contractors. “We know that if we improve this supply chain development and SME development in construction, we’re going to have a huge impact,” says Fernando. We believe that Licify’s solutions to facilitate connections and alleviate key pain points for small businesses in this large industry represent a great opportunity to catalyze growth for a key segment of MSMEs, and we can’t wait to continue supporting them in this journey.

Hear more about Licify from founder Fernando Olloqui:

[embed]https://youtu.be/5pUU95gpz0Y[/embed]

Licify catalyzes growth for small construction businesses in Latin America

[embed]https://youtu.be/5pUU95gpz0Y[/embed]

“We know that if we improve this supply chain development and SME development in construction, we’re going to have a huge impact.” Fernando Olloqui, Co-Founder &amp; CEO of <a href="https://licify.co/" target="_blank" rel="noopener noreferrer">Licify</a>, shares how his company is catalyzing growth for small construction businesses in Latin America. Using a digital platform, <a href="https://www.accion.org/licify-announces-3-4m-seed-round-led-by-brick-mortar-ventures-and-accion-venture-lab-to-revolutionize-construction-procurement-and-financial-services" target="_blank" rel="noopener noreferrer">Licify matches small contractors</a> with building projects and speeding up payments in the construction industry.

<a href="https://www.accion.org/licify-catalyzes-growth-for-small-construction-businesses-in-latin-america" target="_blank" rel="noopener noreferrer">Learn more about why Accion Venture Lab invested in Licify</a>.

Inclusive fintech leader stories: Fernando Olloqui, Founder & CEO of Licify

<span style="font-weight: 400;"><strong>Bogota, Colombia, July 26, 2023</strong> – </span><a href="https://licify.co/" target="_blank" rel="noopener noreferrer"><span style="font-weight: 400;">Licify</span></a><span style="font-weight: 400;">, a groundbreaking Latin American procurement and financial software startup for the construction industry, announced today that it has successfully raised $3.4 million in a funding round led by </span><a href="https://brickmortar.vc/" target="_blank" rel="noopener noreferrer"><span style="font-weight: 400;">Brick &amp; Mortar Ventures</span></a><span style="font-weight: 400;"> and</span><a href="http://accion.org/venturelab" target="_blank" rel="noopener noreferrer"><span style="font-weight: 400;"> Accion Venture Lab</span></a><span style="font-weight: 400;">. Notable investors including Dash Fund, G2 Momentum Capital, and Columbia University’s VC fund also participated in the round, and share Licify's vision of bridging the gap between supply and demand in construction. This funding round marks Colombia-based Licify’s expansion to Mexico, representing another major growth milestone for the company.</span>

<span style="font-weight: 400;">Licify's mission is to transform the construction supply chain by leveraging cutting-edge technology to provide accessible and inclusive digital solutions that connect builders and suppliers, and empower individuals and businesses. The company offers a range of innovative products and services that streamline procurement planning, bidding, billing, and payment conciliation, enhancing efficiency and driving economic growth.</span>

<span style="font-weight: 400;">Recently awarded the Proptech Latam award for the best Contech company in Latin America, Licify has gained recognition for its outstanding contribution to the industry. This achievement further highlights the company's commitment to innovation and its role in revolutionizing regional construction practices.</span>

<span style="font-weight: 400;">According to recent studies, the cost of slow payments in the U.S. construction industry was valued at $208B in 2022. Latin America is no different. Traditional financial institutions need help to address the demands of this massive industry, particularly small businesses. Licify aims to bridge this gap by leveraging technology to offer user-friendly platforms and services that help these companies win more business and get paid faster once they do.</span>

<span style="font-weight: 400;">Fernando Olloqui, CEO of Licify, said: "At Licify, our mission is to empower and connect the construction industry in Latin America by providing them with world-class technology and inclusive financial services. This investment will enable us to scale our operations, enhance our technological capabilities, and expand our reach with our new operation in Mexico. We are thrilled to have Brick &amp; Mortar Ventures, Accion Venture Lab, and our other esteemed investors join us on this journey as we revolutionize the construction industry in our region."</span>

<span style="font-weight: 400;">"This is our first core investment in Latin America, a region poised for transformation and growth,” said Kaustubh Pandya, Partner at Brick &amp; Mortar Ventures. “Licify has the potential to reshape the construction industry through better software and digital financial solutions. We are excited to partner with Licify as they continue to drive innovation and make a lasting impact."</span>

<span style="font-weight: 400;">"As fintech investors, we have seen how hard it is to underwrite micro and small businesses in the construction industry given both their complex cashflow cycles and lack of digitization. Licify leverages its verticalized software to unlock financing and faster payments for thousands of subcontractors. We're excited to work with the team as they expand across Latin America and close the financing gap in the construction industry,” said Amee Parbhoo, Managing Partner at Accion Venture Lab.</span>

<span style="font-weight: 400;">Licify's previous funding rounds enabled the company to achieve over </span><b>17,000 clients</b><span style="font-weight: 400;"> in Colombia and facilitate over </span><b>$2 billion in business</b><span style="font-weight: 400;"> between builders and its supply chain in the last two years. With this latest investment, Licify is well-positioned to further enhance its product offerings, develop strategic partnerships, and drive the adoption of its digital payments services.</span>

<hr />

<h3>About Licify</h3>
<span style="font-weight: 400;">Licify is a leading provider of digital supply-chain management software and financial solutions tailored for the construction industry. Licify offers user-friendly solutions through its innovative platform that empowers construction companies and their supply chain, bridging the gap in new business opportunities and financial services. With a mission to drive inclusive growth, Licify leverages cutting-edge technology to provide seamless and secure transactions. For more information, visit</span><a href="http://www.licify.co/" target="_blank" rel="noopener noreferrer"> <span style="font-weight: 400;">www.licify.co</span></a><span style="font-weight: 400;">.</span>
<h3>About Brick &amp; Mortar Ventures</h3>
<span style="font-weight: 400;">Brick &amp; Mortar Ventures is an early-stage venture fund focused on the Built World. Founded by Darren Bechtel, the firm invests in emerging companies developing innovative software and hardware solutions for the industries of architecture, engineering, construction, and facilities management. Notable past investments of the firm and its General Partner include Seed round participation in PlanGrid, BuildingConnected, BuildZoom, and Rhumbix, as well as early-stage investments in FieldWire and Levelset (formerly Zlien). Brick &amp; Mortar Ventures is based in San Francisco, CA.</span>
<h3><b>About Accion Venture Lab</b></h3>
<span style="font-weight: 400;">Accion Venture Lab is a seed-stage investor that provides capital and extensive support to innovative fintech startups that improve the reach, quality, and affordability of financial services for the underserved and have the potential to scale. Backed by commercial and impact investors since the launch of its third-party fund in 2019, Venture Lab has invested in more than 60 early-stage startups that operate in 30 countries worldwide. Venture Lab is a part of Accion, a global nonprofit committed to creating a fair and inclusive economy, with a pioneering legacy in microfinance and fintech impact investing. Accion catalyzes financial service providers to deliver high-quality, affordable solutions at scale for the 1.8 billion people who are left out of – or poorly served by – the financial sector. For 60 years, Accion has helped tens of millions of people through our work with more than 170 partners in 55 countries. For further information, visit</span><a href="https://www.accion.org/venturelab" target="_blank" rel="noopener noreferrer"> <span style="font-weight: 400;">https://www.accion.org/venturelab</span></a><span style="font-weight: 400;">.</span>
<h4>Media Contact</h4>
Thessa Mooij

<a href="mailto:tmooij@accion.org" target="_blank" rel="noopener noreferrer">tmooij@accion.org</a>

+1 (917) 631-2518

Licify Announces $3.4M Seed Round led by Brick & Mortar Ventures and Accion Venture Lab to Revolutionize Construction Procurement and Financial Services

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Licify catalyzes growth for small construction businesses in Latin America

Inclusive fintech leader stories: Fernando Olloqui, Founder & CEO of Licify

Licify Announces $3.4M Seed Round led by Brick & Mortar Ventures and Accion Venture Lab to Revolutionize Construction Procurement and Financial Services