Fintech startup Vergo secures $4.1 million in seed funding to enable banking for architects, designers and builders | tech news

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The US construction sector was valued at around $1.36 trillion at the end of 2020 and is likely to decline further next year, according to Statista data. If you add the interior design industry, the combined market will reach about $1.4 trillion. Given this enormous market size, it is surprising that the sector does not have its own banking service. But that should change.

Enter Vergo, a New York-based neobank startup dedicated to providing banking built specifically for it
Interior designers, architects, contractors and builders. Currently, the architecture, engineering and construction (AEC) industry forms one of the largest business communities in the world with annual cash flows in excess of $1 trillion in the US alone.

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

The story of Vergo began a long time ago in a cramped apartment in the East Village. Rich Kane, CEO and co-founder of Vergo, came up with the idea for the company after building side-hustles in that industry, including an interior design studio and carpentry shop, which were wiped out during Covid. Kane attributed the startup’s founding to various “pain points” he experienced managing project transactions and cash flow while running his accounting-based “side hustles.”

As he reflected on the struggles he experienced running these companies, Kane realized that it all came down to managing the finances of each project and how many hours each week were wasted reconciling bank statements, invoices, returns and receipts, to find out how much of the client’s budget had been used up to be able to respond to his client’s challenging questions. As his companies grew and won more projects, without a clear path to scale without hiring an army of project managers, the problems worsened.

To further expand 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. Also notable angel investors 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 companies in the home construction and renovation industries. The startup will also use the funding proceeds to expand the product and operations team in the US and the engineering team in Mexico.

As a result of Friday’s news that Brex would break with SMEs, Vergo saw a 500% surge in deposits, mostly from companies in the construction industry, which Brex had heavily targeted over the past year.

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

Vergo said it currently has more than 5,000 companies on its waiting list. The startup also just launched its checking account, which includes virtual project cards and a modern mobile banking app that lets users mark transactions and payments for the first time ever, real-time insight into a project’s finances. There are no credit checks, no minimum balance, and no fees for checks, ACH, and wire transfers. The project cards also have a unique cashback program with extra points on spending on building materials, furniture, gas and equipment rental. Later this year, Vergo will also introduce a credit card, followed by other project management tools like smart invoicing.

“I thought I was the only one doing everything wrong and that everyone else must have been using better software or processes. However, after months of speaking to hundreds of other business owners in the industry, I realized that I was not alone and that everyone else had the same problems and some even went bankrupt for struggling with managing project finances,” says Kane.

“Effective financial management of architectural and interior design projects is fundamental to their success,” said Wearstler. “With its ability to streamline this process for everyone involved, Vergo will be an indispensable tool for architects and designers.”

“Vergo is revolutionizing fintech for the future of home construction, renovation and design,” said James Green, General Partner of CRV. “Vergo represents the growth of vertical SaaS as we see more companies offering 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 designing a solution is impressive in itself, but the proof of concept was further validated when we saw him waitlist 3,000 companies in less than seven weeks.”

“There aren’t any great tools out there to help home renovation companies manage their finances,” said Sander Daniels, co-founder of Thumbtack, one of the largest marketplaces for home renovation professionals in the United States. “The opportunity to build something great for these companies is tremendous. I am delighted that the Vergo team is taking advantage of this huge opportunity with their financial platform.”


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