PermitFlow - TurboTax for Construction Permitting

Company & Team Introduction

PermitFlow is the world’s leading software designed to reduce errors and expedite the complex process of obtaining building permits. The Y combinator-backed startup was founded in 2021 by a duo of Harvard graduates, Francis Thumpasery (CEO) and Sam Lam (CTO). Before starting PermitFlow, Francis worked in consulting at McKinsey and as an investor in workflow software at PE firm Advent International and a Hedge Fund. Sam previously worked as a software engineer at Uber and co-founded digital market agency NXTFactor. The pair envisioned a digitally automated version of the permitting process after witnessing firsthand just how cumbersome obtaining permits can be with relatives who struggled through the long and complex process in the past. The company is based in Milpitas, California and has expanded its team to ~50 employees.

Product Overview

PermitFlow’s product has revolutionized the construction industry, driving incredible efficiency and cost savings. With their user-friendly platform, builders can now easily manage multiple projects within a single municipality or across various states, automating tasks and simplifying the complex process. PermitFlow empowers contractors and builders with features like permit preparation and submissions, tracking permit applications, municipal back-and-forth, application revisions, and fee payments, leading to faster and error-free permits on a centralized platform. Another benefit of PermitFlow is it aligns all stakeholders, as all information is easily accessible on the platform.

Total Addressable Market

PermitFlow’s market opportunity is immense, as the construction vertical they are tackling is among the largest in the world. Its software is tailor-made to ease the lives of global construction workers and speed up the permitting process that is largely done via pen and paper. The total addressable market for the worldwide construction industry is estimated to be as large as $1.6T, with faster permits alone representing a ~50B opportunity.

Business Model & The Numbers

PermitFlow uses a subscription business model to charge their customers with pricing determined by various factors, including the type of permit needed and the jurisdiction where the permit is issued. The company also offers tiered discounts based on project volume and spending. PermitFlow has seen blistering growth, with ARR up more than 20x YoY in 2023, but the company declined to disclose revenue figures.

Traction

Early traction for PermitFlow has been promising, with the company initially gaining in some of the largest states in the US, such as Florida, Texas, and California, with a plan to expand strategically throughout the rest of the US. The company already has dozens of big-name customers on a recurring subscription basis, including Brookfield Properties, Cushman & Wakefield, Wright Construction Group, Red Tail, and Lennar Corp., the second largest home builder in the US with over 59000 homes closed in 2021, generating 25B+ in revenue. PermitFlow has helped expedite the issuance of over 5000 housing units. The company was also a co-winner of the 2023 Ivory Policy and Regulatory Reform Award.

Competitors

With such an enormous opportunity to digitize the tedious permitting process, some formidable competition has emerged to improve the process via software. Here is a bit about PermitFlow’s main competitor:

withpulley.com - Founded in 2021 by Charlie Jacobson and Andreas Rotenberg, Pulley was built to accelerate the inefficiencies of the intricate permitting process, helping to alleviate some of the industry’s most difficult challenges, like the shortage of housing and affordability concerns. Pulley offers many similar features to PermitFlow, including aids for preparing and submitting permits, tracking application status, and responding via magic comment parsing and quick replies. The company has built an impressive customer base, including Wood Partners, JLL, Revel, Presidium, and HITT. Pulley raised a $4.4M seed round in 2022 led by Seth Berman from Susa Ventures with participation from numerous strong backers, including Suffolk Technologies, South Park Commons, Fifth Wall, Ryan Peterson (Founder, Flexport), Nat Friedman (ex-CEO, Github), Jean-Denis Greze (CTO, Plaid), Craig Tooey (Founder, Procore), Connor Theilmann (CBO, ServiceTitan) and Chase Gilbert (CEO, Built Technologies). Pulley is headquartered in and has grown its team to ~24 employees.

Funding

PermitFlow has raised a series of funding events to fuel its blistering growth. The company’s first capital injection came in early 2022 when it received an initial 500k investment from Y Combinator, Roman Smolevskiy, Davidovs Venture Collective, and Adam Zobler from Foundamental, a German VC investing at the intersection of Construction, renovation, and design technology. In May of 2023, the company raised a proper $5.5M seed round with an impressive list of backers, including Kim-Mai Cutler from Initialized Capital leading the round, a follow-on investment from Adam Zobler from Foundamental, and new participants such as OpenDoor Venture Capital, Mighty Buildings, PlanGrid, Procore, Thumbtack, and Zillow. To capitalize on its existing momentum and massive market opportunity, the company tapped the capital markets again in January 2021, raising a substantial $31M series A round of funding led by Josh Coyne from Kleiner Perkins, follow-on investments from Kim-Mai Cutler at initialized Capital and Y Combinator in addition to new investors Altos Ventures, Felicis and prominent angel investor Bradley Horowitz. While PermitFlow declined to comment on the company’s valuation based on the funding round, it did reveal that its valuation increased from its previous round. PermitFlow’s strategic capital raises have aligned its success with many key players in the construction industry.