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Fintech startup Vergo bags $4.1M in Seed funding to provide banking for architects, designers, and builders



The U.S. construction sector was valued at around $1.36 trillion as of the end of 2020 and was expected to decline further in the next year, according to data from Statista. If you add the interior design industry, the combined market will reach about $1.4 trillion. Considering this massive market size, it’s surprising that the sector doesn’t have a dedicated banking service. But that’s about to change.

Enter Vergo, a New York-based neobank startup that’s on a mission to provide banking specially built for
interior designers, architects, contractors, and home builders. Currently, the architectural, engineering, and construction (AEC) community constitutes one of the largest business communities in the world, with over $1 trillion in annual payment flows in the US alone.

At its core, Vergo blends elements of banking with project management and accounting software functions to serve the specific needs of small and medium-sized enterprises in the AEC community. The startup also offers a debit account, cashback card, and invoice management software with no annual fees or credit checks.

The story of Vergo started way back in a cramped East Village apartment. Vergo CEO and co-founder Rich Kane fell upon the idea for the company after building side hustles in this industry including an interior design studio and carpentry business which got wiped out during Covid. Kane traced back the founding of the startup to various “pain points” he experienced managing project transactions and cash flow while running his invoice-based “side hustles”.

Reflective on the pain points he experienced running these businesses, Kane realized that it all came back to managing the finances of each project and how many hours were wasted each week reconciling bank statements, invoices, returns, and receipts to figure out how much of the client’s budget had been used so he could respond to his client’s demanding questions. As his businesses grew and won more projects, the problems intensified with no clear path to scaling without hiring an army of project managers.

To further grow its platform, Vergo announced it has raised $4.1 million in a seed round led by CRV with participation from Nine Four Ventures and Forum Ventures. Notable angel investors also include celebrity interior designer Kelly Wearstler, Thumbtack co-founder Sander Daniels, Alloy co-founder Laura Spiekerman and Built founder, Chase Gilbert.

Vergo will use the new capital injection to build a financial platform for businesses in the home building and renovation industry. The startup will also use the funding proceeds to scale up the product and operations team in the U.S. and the engineering team in Mexico.

As a result of the news on Friday that Brex was breaking with SMBs, Vergo saw an increase of 500% increase in deposits primarily from businesses in the construction industry, which Brex had been targeting a lot over the past year.

Getting paid by clients on time, paying contractors, managing invoices, and paying sales taxes were just some of the many other constant daily headaches which made running businesses in this industry hard. In early 2021, Kane made the decision to leave JPMorgan where he was a Senior Vice President in the Technology Strategy team, and partnered with his Mexico City-based co-founder Einar Hohenstein to build Vergo.

Vergo said it currently has more than 5,000 businesses on its waitlist. The startup also just launched its checking account, which includes virtual project cards and a modern mobile banking app that lets users tag transactions and payments to get a real-time view of a project’s finances for the first time ever. There are no credit checks to apply, no minimum balance, and no fees on Checks, ACH, and wires. The project cards also have a unique cashback program with extra points when spending on building supplies, furniture, gas, and equipment rentals. Later this year Vergo will also be launching a credit card followed by more project management tools like intelligent invoicing.

“I thought I was the only one doing it all wrong and that everyone else must have been using better software or processes. After months of speaking to hundreds of other business owners in the industry though, I realized I was not alone and that everyone else experienced the same problems with some even going bankrupt from struggling to manage project finances,” Kane says.

“Effective financial management of architecture and interior design projects is fundamental to their success,” said Wearstler. “With its capability to streamline this process for all parties involved, Vergo will be an essential tool for architects and designers.”

“Vergo is disrupting fintech for the future of home building, renovation and design,” said James Green, general partner, CRV. “Vergo represents the growth of vertical SaaS as we see more companies providing industry-specific solutions, typically based on the pain points experienced directly by the founder. Rich’s deep understanding and personal experience in identifying the problem and creating a solution is impressive on its own, but the proof of concept was further validated when we saw he had 3,000 companies on the waiting list in less than seven weeks.”

“There are no great tools on the market to help home renovation businesses manage their finances,” states Sander Daniels, co-founder of Thumbtack, one of the largest marketplaces for home renovation professionals in the U.S. “The opportunity to build something great for these businesses is enormous. I’m excited to see the Vergo team going after this huge opportunity with their financial platform.”

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  • Source: https://techstartups.com/2022/06/22/fintech-startup-vergo-bags-4-1-million-seed-funding-provide-banking-architects-designers-home-builders/

This Post was originally published on TechStartups

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