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Construction, Revolutionized

To Our Valued Investors:

Of the many things we have learned as a society this year, the innovative ways in which we can easily collaborate on projects without the benefit of face-to-face meetings is a big one. Perhaps the most prominent example of this is that of Zoom Video Communications (NASDAQ: ZM). It is unlikely that anybody reading these words can say that they haven’t participated in a Zoom conference in 2020. Most have children who had at some point attended classes through the portal. Many of today’s regular Zoom users had never even heard of the service as of this time last year. Zoom’s efficient way of helping people to “get together remotely” — for work, for school, or for social gatherings — has made the company an invaluable tool in these pandemic-dominated times.

Now, imagine yourself trying to construct the world’s finest birdhouse. It would take collaboration to accomplish this task. Perhaps you would want to consult your local zoning officials, a wood supplier in Vermont, a team of ornithologists in London, and an architectural design firm in Milan to collect the best ideas and materials to produce a domicile for your feathered friends. Your biggest challenge would be keeping track of dozens of emails, payments, and deliveries related to the endeavor.

On second thought, maybe you would be better off simply driving to Home Depot, donning a mask, picking out a prefab birdhouse, and calling it a day.

For those engaged in more substantial projects, such as the creation of a 75-story commercial building in the center of a large city, the Home Depot option is not on the table. The need for detailed collaboration is very real. A complete and accurate orchestration of supply chains, labor dispatch, and (especially) coordination with design specialists is crucial. This is where Procore comes in.

Founded in 2003, Procore is a construction project management software company headquartered in Carpinteria, CA. Its platform centralizes all of the vital data related to individual building projects. From the design phase to completion, a construction project using Procore provides access to all relevant players — architects, zoning requirement specialists, suppliers, site coordinators, and others — and allows them to monitor each other’s progress and maintain timely records of their own. Procore’s platform for each job takes the form of a two-dimensional blueprint, but a user can toggle between that familiar depiction and a three-dimensional virtual walkthrough of the building.

As an example, an HVAC professional based in Cleveland might need to examine an issue related to a skyscraper he’s been hired to oversee in Los Angeles. Instead of boarding a plane to LAX, the HVAC guy can log on to the Procore application, open the blueprint for that building, and then enter the 3D model after pinpointing the trouble spot. There, he will be able to view the user-generated comments, emails, and on-site images uploaded by others. An inspector also using the virtual model might have flagged a potential code violation, and after confirming the issue, the HVAC specialist would request that the construction foreman send in a technician to correct it, pinning the comment to the appropriate spot on the virtual image. Once completed, the Procore platform is amended, and the duct work is safe and compliant. A process that used to require multiple visits from people in hardhats, measuring and tsk tsking, can now be executed remotely. Only the person doing the physical labor needs to be present.

This phenomenon — the “Zoom of construction work” — is known as Building Information Modeling (BIM). Procore did not invent the practice; the concept has existed for decades. Historically, though, BIM has had severe deficiencies in its usefulness. Unsophisticated coding and spotty communications were the culprits in the 1970’s through the ‘90’s. This century, the absence of standard practices among BIM practitioners stood in the way of true efficiency. About a year ago, with the establishment of an international standard for BIM in the United Kingdom, the application finally found its footing. Paired with the seamlessness afforded by high-speed internet and advanced VR technology, the standardization allows BIM to realize its true potential. Procore is quickly emerging as the gold standard of BIM providers.

Valued at $4.7 billion after a funding round in September 2019, Procore recorded revenues of $289.2 million last year, albeit with a net loss of $83.1 million. Its early investors include Tiger Global Management and Bessemer Venture Partners, the latter of which holds the distinction of being America’s longest-standing venture capital practice. Clearly, the smart money is backing this company. Make no mistake about it: a company like Tiger has met with great success because they have an uncanny ability to pick the right horses upon which they should place their bets. Their backing of Procore makes a compelling statement.

As BIM technology is entering a new and exciting phase of modernizing large building construction processes, Procore’s applications stands to prevent huge losses generated by situations in which contractors might otherwise have had to tear out and re-do entire electrical systems, plumbing work, countertop fixtures, and the like. It promises to be the new essential tool in the hands of all large-scale commercial builders.

As a privately held company at this moment, Procore shares are not yet available to the investing public. Last February, the company did file documents with the U.S. Securities and Exchange Commission to go public, and we anticipate that a debut will happen soon as recent months have demonstrated that it’s safe to go back in the water again. Still, current access to Procore shares is generally limited to deep-pocketed early-stage VC outfits and company insiders. That said, your friends at Iron Edge VC can put a piece of this promising enterprise squarely in your hands before the masses have their chance at driving the ticker price upward. If you would like to learn more, or if you know of anybody else who would, do not hesitate to contact us by clicking “Get in Touch” below.

If you have enjoyed this article, visit the Iron Edge Blog for past updates on other pre-IPO investment opportunities.

As always, shares are available on a first come, first served basis.

All Our Best,

Paul Maguire, Managing Partner and The Iron Edge Team

5f6e0d464e388c4975685025 Paul Min

Paul Maguire

Founder And Managing Partner