Fonn, a Norwegian sofware startup raises $3m to help fund its continued expansion in US, UK and European housebuilding markets.
Norwegian construction SaaS software startup Fonn has announced a US$3m (c. €2.5m or £2.25m) funding round led by Oslo-based venture capital firm Idekapital. Aidiom, Investinor, Skagerak Maturo and Oxer Kapital were co-investors in the business, which is based south of Bergen. It aims to “reinvent project management for construction” globally.
Fonn foundations
Fonn Construction was founded in 2016 by Jan Tore Grindheim after he had first-hand experience of poor communications, lack of documentation and inefficiency when he commissioned his own house. Looking to improve collaboration and information sharing among the various subcontractors involved, he created Fonn Construction. The prototype application was developed with support from his brother (chairman of Lean Construction Norway) and from a friend with a PhD in information technology and user experience. Backed by some investment from Innovation Norway, their initial focus was “What does the site worker actually need to get his job right?”
The business was launched commercially in 2018, aiming to provide site workers with an intuitive and easy to use solution that could be accessed via the web and on mobile devices (iOS and Android). It puts the latest information literally at the fingertips of site-based personnel, while providing a hub for managing communications. In less than two years, Fonn Construction was reported to have signed up over 50% of major home builders in Norway. Subcontractors started using the system for refurbishments and small projects, and larger commercial contractors embraced the mobile and user-friendly tool on their sites. Grindheim, right, says: the firm’s success “is based on Norwegian principles of quality, and an extreme focus on user-friendliness in an industry that is lagging in digitalization.”
In 2019, a seed-funding round helped the company to grow further, and to expand into other, larger markets outside Norway. Extranet Evolution understands it has a three-strong team in the UK (including former BuilderStorm CEO David Lawrence; post) and four people in the United States. In total, the company now has over 20 FTE staff – 10 in Norway, plus some developers and support staff in Spain and Poland.
Fonn fundraising
Fonn was previously supported by Innovation Norway and Connect Norway and financed by investors from BAN Bergen. This has helped it grow in the UK and US to the point that around 80% of Fonn’s new sales come from these markets. Investment manager Frida Rustøen explained why Idekapital led the latest fund-raising round:
“We have been following the construction industry for a while and have met with several software companies aiming to improve project management in the space. We’ve worked closely with the management team for months, we have tested the solution, and talked with many industry players. We were amazed by the satisfaction level of their users! Fonn has made wise choices for their product by focusing on usability, and our impression is that Fonn has the best solution available. We were instantly impressed by the professional and go-getter team and the growth they have proven over the past few years.”
Jon Øyvind Eriksen, CEO of Aidiom, said: “We invested in Fonn because digitalization of the trillion USD housing sector represents a huge market opportunity. The value added from the construction sector contributes to 4% of the US GDP in 2019. Applying software to improve productivity, Fonn is positioned to become a leading platform for the residential construction industry.” Fonn says around 85% of US home builders are not using any project management software.
International growth
The company’s chief sales and marketing officer Daniel Skotheim says:
“With the new capital, we intend to triple our recurring revenue over the next 12-18 months. We will continue our international growth, and at the same time strengthen our position in the Nordics.”
EE has covered other Nordic startups targeting the housebuilding sector, including Finland’s SME application HomeRun, the quality and safety management tool Congrid, and project management app Derigo (post). Skotheim, right, continues:
“Fonn is well placed to be a success in both the US and the UK for a number of reasons. The product is well-designed, easy to use and accessible to a wide range of companies – with an excellent feature set for the SME market – a market that has often been overlooked. Immediately finding a product-market-fit, we have already scaled our international presence in the US and the UK. Focus now is to further strengthen these teams with new resources.”
Market positioning
In the UK, the company featured in a recent Construction News report about the COVID-19 pandemic. As previously mentioned, the feature said technology has “proved key in the crisis,” citing use of generic video conferencing tools such as Zoom and Teams as well as industry-specific tools such as Fonn, Autodesk’s Plangrid, and Procore. UK-based Lawrence believes Fonn will be competing against tools like BuilderStorm, BuilderTrend and LetsBuild (post), saying the UK SME construction market is still a large and hitherto largely untapped marketplace.
Small builders and subcontractors, however, are increasingly targeted with a range of different solutions. Earlier this year, for example, EE covered the London launch of Buildiro, and, in May 2019, the Snaffle mobile app – both enabling tools and materials purchasing by tradespeople. And EE recently reported the August 2020 launch of Skrap – a construction hire marketplace connecting construction businesses with on-demand skip and construction hire-related services.
Fonn’s pricing is based on the size of the customer company, and once implemented includes unlimited projects, unlimited users, and unlimited storage at no extra cost. For small businesses with revenues under US$2m, the subscription is US$149 per calendar month.
