🦄 Unicorner Startup of the Week:

Tough Leaf

✍️ Notes from the Editors

Today’s article is brought to you by THELAB. Founders: we know your deck sucks. THELAB is your pitch and raise source to get you funded.

Over the past few weeks, we’ve put out several construction-tech startup covers.

It’s no coincidence. Since 2023, contributor Derek Wong has been diving deep into the construction world. He’s compiled 31 construction startup breakdowns on LinkedIn and X, some of which you’ve already read about on Unicorner.

In other news, Derek’s getting married soon and is on a hiatus from Unicorner to focus on what’s important. We dedicate this week’s article to him and his bright future ahead.

Wish him congrats and read his awesome construction content on LinkedIn! 🎉

- Ethan and Arek 🦄

Matching contractors with minority businesses

Tough Leaf helps construction firms find certified small, local, and diverse firms. Whereas the current process of finding the right subcontractors can be a manual process, relying on old contacts or referrals, Tough Leaf uses AI and machine learning to identify a subcontractor that meets all the requirements in a fraction of the time.

🔗 Check it out: toughleaf.com

💰 Business Model

Clients hire Tough Leaf to streamline the sourcing of diverse subcontractors to help them achieve project diversity goal.

📈 Traction and Fundraising

• Raised $3.1 million seed from AlleyCorp, Stellifi VC, and angels from the Real Estate and Construction space

• Enrolled 200,00 certified small, local, and diverse businesses (eg. businesses led by women, minorities, and service-disabled

  veterans) nationwide

• Awarded over $250 million in contracts

👫 Founders

• Wissam Akra, CEO: Over 10 years of construction experience, previously Build Manager @ Dragados USA, MS @ Columbia in Construction Management - Civil Engineering

📖 Founder Story

After managing multiple billion dollar construction projects, Wissam Akra was tired of the old ways of contracting people. 

Akra has been in the construction industry for over a decade and has a masters from Columbia in Civil Engineering. He has worked in New York, on multiple billion dollar contracts, such as  highways, bridges, and tunnels. On one particular project, the Second Avenue Subway, Akra was faced with a challenge he wasn’t expecting:

Finding qualified and diverse subcontractors. 

With this frustration of trying to find qualified minority and diverse subcontractors, the idea for Tough Leaf was born.

🔮 Our Analysis

When construction projects get big enough, even the smallest responsibilities can become a nightmare to manage. 

One of the responsibilities that no one thinks of is fulfilling federal small business contracting goals.

For example, prime contracts (contracts issued by the government), are required to have at least 20% and realistically, closer to 30%, of the project’s budget delegated to small businesses, disadvantaged businesses, and other qualifying businesses. When the government signs a $1 billion contract to build a hospital or fix a highway, hundreds of millions are supposed to be directed to these small businesses. But, the government isn’t very good at meeting those standards.

In 2021, New York City’s Department of Transportation had over $750 million issued to these small, underserved businesses. After an audit of this budget, they were issued an F grade across the board for failing to contract out to businesses run by African Americans, Asian Americans, Hispanics, and Women. 

It’s estimated that over $100 billion is allocated to contracting toward these minority businesses, and about half of that goes unallocated.

From the perspective of the subcontractors, bidding on contracts can be challenging when competing with larger firms. 

This is where Tough Leaf steps in.

Tough Leaf streamlines the process of connecting construction companies with certified small, local, and diverse subcontractors. By leveraging AI and machine learning, coupled with human outreach, Tough Leaf matches clients' requirements with its database of over 200,000 certified diverse firms. This approach ensures that clients receive accurate and cost-effective bids from qualified diverse firms within their desired timeline, saving project managers valuable time and effort while meeting diversity requirements.

Having awarded over $250 million on its platform and working with some of the largest contractors in the nation working on billion dollar projects, Tough Leaf is poised to solve a small, but horribly inefficient problem.

📚 Further Reading

• Tough Leaf Announces Successful Seed Funding Round [Business Insider]

Written by Derek Wong

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