ToolBelt: Construction gets connected
Joshua Engelbrecht was running a residential construction company he had started with a couple of partners in Vancouver, Washington, when he became aware of an ongoing challenge.
The company tended to rely on the same network of subcontractors, which meant there were times when they had to turn down work because all of their tradespeople were already tied up on the company's other jobs. Other residential companies told him they were running into the same issue.
"If an accounting firms needs people to expand to Seattle, they can go online and post positions at Indeed, Monster, ZipRecruiter to fill that space. And then you're still continuing on about your day," the 27-year-old Engelbrecht said. "For the construction industry, there's nothing like that. They all just have established networks, and it's all word of mouth. I started thinking there had to be something out there."
A deep dive online revealed there wasn't a solution available. That's when Englebrecht's entrepreneurial nature kicked into overdrive.
In a short time, he had come up with a solution, an app called ToolBelt, that recently was one of five startups named winners in the 2019 Beaverton Startup Challenge.
The app, which focuses on the new residential construction, residential renovation and light construction markets, aims to connect contractors with tradespeople. The app is currently in the beta testing stage, but Engelbrecht, who is CEO and founder of ToolBelt, and co-founders Anthony Arriaga and Mike Norman are already collecting pre-enrollments for when the app rolls out in less than two months.
For contractors, ToolBelt allows a chance to list current or upcoming projects for which workers are needed. Companies can identify specific parameters of each job as well as the skills or talents the ideal tradesperson would possess. Photos of projects also can be uploaded.
For tradespeople, ToolBelt offers a chance to create a building industry version of a portfolio, complete with pictures of projects worked on, experience and references from past employers.
"Why not be able to give (tradespeople) the power to be able to promote and market yourself so that you don't have the stress of having to find your next job?" Engelbrecht said.
Starting business ventures is nothing new for Engelbrecht. When he was in college, he ran a franchise operation that focused on painting houses. It was after a stint in the naval reserves, though, that he realized he was an entrepreneur at heart.
The Vancouver construction company he co-founded was on solid ground by the time he decided at the end of 2017 to step away and focus full time on his idea for ToolBelt. He even knew the approach he should take in developing the app.
"I saw the connection gap in the industry," Engelbrecht said. "Right now, everyone's looking to increase production. The solution's simple. The whole industry is project based. It's very transactional. There is not a platform out there that deals with project-based work. That was when it clicked for me."
He tapped Arriaga, a friend from college who has a decade of experience in the tech sector, to join him as ToolBelt's chief information officer. Engelbrecht also convinced Norman, a former senior partner at IBM, to become involved as chief operations officer.
While Engelbrecht was convinced the idea behind ToolBelt was solid, Arriaga and Norman challenged him make sure there was a need for the product.
"So, I went out. I talked to some of my commercial colleagues, people I know in home building, residential remodelers, suppliers, manufacturers," Engelbrecht said. "Nobody has yet told us it's a bad idea. They just wanted to know when it was launching."
By April 2018, the team was convinced they had a workable product. At the end of last summer, they decided to take a leap and submit ToolBelt in the Beaverton Startup Challenge.
In the money
The Challenge is coordinated by the Oregon Technology Business Center, a nonprofit started by the city of Beaverton in the early 2000s. At first, the center operated as an incubator, renting out space at lower-than-market-rate rents to technology startups. In 2015, the city pitched in $50,000 to start the first Beaverton Startup Challenge. The center drummed up the same amount in angel investor money. From that $100,000 pot, five startup companies were each awarded convertible notes worth $20,000. The competition was so successful that the center was able to coax more investor money, which has resulted in winners now each receiving $25,000.
While a few startups come to the competition with some investor money in hand, most don't. The money is a boon for startups looking to establish themselves and gain the type of credibility and experience needed to attract angel investors with deep pockets.
"The Challenge is really one of the few opportunities in the Portland area for a company that's really not quite investor-ready to apply for a $25,000 investment," Steve Morris, the executive director of the nonprofit said. "Twenty-five-thousand dollars doesn't go very far, but one of the important parts is that it's that first bit of recognition, that first vote of confidence."
Each startup winner is given space at the center's building on Cedar Hills Boulevard in Beaverton. The startups also have a chance to tap the expertise of staff at the center as well as the investors who pitched in to help build the pool of award money.
In return, startups agree to provide quarterly financial reports for five years after they finish their one-year time in the startup program, which allows the center to track progress as well as continue to help make connections in the investment community.
Since starting the challenge, companies named winners have raised $13.5 million in additional investments.
The ultimate goal, Morris said, is to have startup companies reach a point where they can pay back the initial $25,000 convertible note investment. That's already happened with one winning startup. In September, C3 Backflow, a 2017 winner, was acquired by a larger publicly traded company from the Boston area.
For the most recent Challenge, Morris and Jim McCreight, who serves as the center's director for strategic partnerships, started off by going through the 42 of the applications receive. The competition usually attracts between 35 and 62 applicants. Startups with ideas that aren't developed enough for the Challenge were removed from the pile, but they weren't completely dismissed.
"Even if it's not the right fit, we point them in the direction to find help that would be a better fit," Morris said.
The companies that did make the cut were then called in for 30-minute in-person interviews with Morris and McCreight. The initial pool was then narrowed down to a dozen startups, who were interviewed by investors in the Challenge.
Engelbrecht said the interview with the investors was a great chance to practice his ToolBelt pitch and reminded him of a scaled-down version of the television show Shark Tank where entrepreneurs try to coax investors to large sums of money into their ideas.
The Startup Challenge segment with the investors is both designed to help competing companies start to learn what investors look for while also allowing investors to fully evaluate whether a competitor has what it takes to move to the next level, according to Morris.
"We try to keep it a friendly Shark Tank, but these are investors who are investing their money," he said. "If they have a concern about (one of the business models), they'll ask about that. That's the first role of an investor, and the things they're asking about are important for companies to think about."
The investor panel was impressed with ToolBelt and the co-founders' presentation for several reasons, Morris said. The most important element the startup brought to the table was the fact that a need had been identified and the best solution finally selected. Another big plus in the eyes of the investors, according to Morris, was that Engelbrecht had experience with the very problem ToolBelt seeks to solve.
"This isn't theoretical knowledge. He lived the problem; that's always good.
To Engelbrecht, that construction industry connection is key to what he believes will be ToolBelt's success. Instead of just relying on his own experience, he also took into account the suggestions and experiences from contractors, suppliers and others in the industry.
"It's built by contractors, from people inside the industry, for contractors," he said.
Ready to launch
Engelbrecht and his partners are planning on using their $25,000 from the Startup Challenge for additional development and marketing.
The founders of the app have already identified one challenge — the construction industry battles a public perception that it can, in general, be slow to embrace change. But Engelbrecht says apps are something that almost everyone in the building industry now use as a regular part of business.
Still, the app will only work if contractors and tradespeople use it. So, the ToolBelt team has been working to create connections with trade groups, suppliers and manufacturers, and programs that are funneling a next generation of workers onto project sites.
The full app is set to officially launch in March, according to Engelbrecht. Once that happens, he predicts the construction industry is going to experience a major change.
"ToolBelt is completely going to shift how the construction industry communicates for connecting," he said. "No one should ever say I don't have work when ToolBelt's around. No one should ever not have enough people."