Tech startup inks $100M deal to help build 400 homes
Phoenix company turns blueprints into step-by-step assembly instructions
With demand for new homes surging, a Phoenix startup is teaming up with a local builder to churn out 400 new homes using software that converts blueprints into Ikea-like assembly instructions.
With a new, $100 million partnership, Mosaic Building and Mandalay Homes said they will build hundreds of single-family homes in northern Arizona over the next 24 months.
In conjunction with the deal, Mosaic said it closed a $14.25 million Series A led by Andreessen Horowitz, bringing its total funding to $24.75 million since 2015. Other investors in the round included Founders Fund, Thrive Capital and Greylock Partners.
Building Ventures, a construction-tech VC, also participated in the funding, alongside Eric Wu, CEO of Opendoor, and real estate scion Michael Milstein.
Founded by Salman Ahmad and Sep Kamvar, Mosaic’s software is designed to help contractors build better-quality homes faster and at lower cost. Its digital worksheets are one way Mosaic said it accomplishes that goal, by helping to rethink construction schedules and eliminate redundant tasks.
Unlike companies that built prefabricated homes or parts, Mosaic aims to standardize the process — not the product — of homebuilding.
“The approach we’ve been taking has been focused and problem-oriented to specific needs,” Ahmad said. “When you look at homebuilding operations in markets like Arizona and Texas … the real shortage that exists right now is the shortage of skilled labor.”
To date, Mosaic’s focus has been on framing. Its software can calculate how much lumber a project needs and have the wood cut first and then delivered to the job site, reducing waste and speeding construction. The software can also be used to give lumber yards precise instructions to pre-assemble wall panels.
Mosaic’s Series A comes at a time when more investors are focused on construction tech. (SoftBank-backed Katerra is one beneficiary.)
“The industry is too big to be ignored,” said Travis Connors, a co-founder of Building Ventures, a construction-focused VC fund based in Boston and San Francisco. He said nearly every industry but construction has been disrupted by manufacturing. “It’s a generational process that needs to change.”
Mosaic and Mandalay have partnered before. Since 2018, they have built 70 homes in Arizona.
Mandalay CEO Dave Everson said Mosaic has helped his team shave 20 percent off the time it takes to frame a home at a time when demand for new homes is surging and supply is limited.
Sales of new, single-family homes rose 13.9 percent between June and July to an annualized rate of 901,100, the highest since December 2006, the Commerce Department reported this week. Single-family housing starts rose 8.2 percent.
Everson said by increasing production to meet demand, Mandalay is poised to capture market share in Arizona. Using Mosaic, the homebuilder has been able to train relatively new workers to assemble walls using pre-cut packs, addressing the shortage of skilled labor.
“We’re all trying to get more done with less,” he said. “It almost doesn’t matter where you are in the experience chain.”