CAPVEE Interview: DigiBuild
We followed up with DigiBuild's leadership to address questions and concerns
CAPVEE Interview: DigiBuild
We spoke to Rob, April, Ivan, and senior industry advisor Tommaso last week to discuss some of our questions and concerns from our initial analysis. If you haven’t read the first report, you can find it here.
Before we continue, a big ‘thank you’ to the DigiBuild team for taking the time to speak with us!
Following the Q&A, we are more confident that the team will be able to successfully penetrate the construction management software market. However, our concern regarding the threat of new entrants remains intact. On that basis, we re-confirm our buy recommendation of DigiBuild.
We summarized the interview key take-aways below, and you can watch the highlights of the interview in our YouTube playlist.
Nifty Sales Strategy
In our initial analysis, we pointed out that DigiBuild faces a major sales challenge as the construction sector is inherently risk-averse and conservative.
After the Q&A, we are more confident that Rob and April have the necessary domain expertise, industry network, and salesmanship to convince national construction companies as well as small and medium-sized family-owned businesses to embark on this painful but necessary digital transition.
We are impressed by DigiBuild’s sales strategy. The company is focusing its attention on the industry’s power brokers – insurance companies and owners/developers – which in turn dictate terms of engagement (including choice of construction management software) to stakeholders further down the value chain. According to management, the company is working on a partnership with one of the leading insurers in the United States, which would be a game-changer.
Early Sales Traction
Our concern is further alleviated by the fact that the team has recorded early sales traction, hitting $12,000 in MRR (monthly recurring revenue) from three customers in Q1 2021. According to Rob, the team is on-track to reach its goal of $1.3 million for FY 2021, but that assumes substantial growth in the second half of the year. Rob also mentioned that DigiBuild is in the process of finalizing a strategic partnership with one of the largest construction companies in the U.S., which may invest in DigiBuild, use its software solutions, and leverage its network to open doors for the company.
Threat of New Entrants Remains
We remain concerned about the threat of new entrants. We may have overstated the risk of foreign competitors in our initial analysis as Probuild/Brickschain have not gained much traction since partnering in 2018. Meanwhile, DigiBuild has made significant inroads with multiple national construction companies and launched a pilot project with IBM Blockchain.
However, we still believe that the threat of established players in the construction management software market needs to be taken seriously. The main players today are Procore and Autodesk. Even though they’re using centralized databases today, they have been talking about releasing blockchain technology-based solutions in the future.
Rob says that he is not concerned with domestic competition and that he is laser focused on his customer’s needs. Obsessive customer focus is the right approach, but the team must keep an eye open to emerging external threats.
Next Step: Scaling Software Team
We also enjoyed our chance to speak to Ivan, lead software developer and proud University of Illinois drop-out (go Fighting Illini!). The development team is only three deep (including Ivan), and – with just $340,000 in funding – it’s been able to launch three fully-fledged software solutions. Undeniably impressive.
According to the Q&A, the proceeds from the current raise will go a long way in scaling the software development team and shorten time-to-market for upcoming releases. This would certainly entrench DigiBuild’s early lead.
Interview Key Take-Aways
Q&A Part 1 - The construction industry’s biggest challenges and DigiBuild’s opportunity
Q&A Part 2 - DigiBuild’s solution to the problem
Q&A Part 3 - DigiBuild’s software lineup
Q&A Part 4 - The Management Team
Disclosure: The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.Thanks for reading and watching! If you liked this and haven’t yet subscribed, you can do so below.
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