Vancouver-based ToolBelt is set to start 2024 with a fresh round of capital after securing $3.2 million from new and existing investors.
The funding adds to the momentum the company has already seen this year. Its construction labor market product has gone from being available in eight West Coast cities to becoming available in 495 markets across the country.
“From a revenue standpoint we are up 386% year to date,” said co-founder and CEO Josh Engelbrecht. “Our user base has exploded and we are bringing on large customers across the country.”
ToolBelt makes a construction employment app to connect general contractors and homebuilders to subcontractors and tradespeople. A project is posted and then job seekers can search for projects in need of their expertise.
The round was led by Mynavi, a Japanese corporate investment firm that focuses on human resources tech. The fund was interested in more U.S. investments and its analysis of the market led it to ToolBelt, said Engelbrecht. For his part, Engelbrecht sees Mynavi as a strategic partner to help the startup’s national rollout.
Another new investor in the round is Collab Capital, a firm out of Atlanta that is focused on HR tech, infrastructure and backing Black and other underrepresented founders. The startup also landed investment from this year’s Bend Venture Conference which was included in this round.
Other local backers are Rogue Venture Partners, Portland Seed Fund, Cascade Seed Fund and Elevate Capital.
In a year that has been more challenging for fundraising, Engelbrecht said he is proud his team achieved an up round, meaning the valuation before the investment was higher than previous rounds. As fundraising has become harder, the likelihood of down rounds, where valuations fall, increases.
He credits a key hire last year — Mark Raines as chief revenue officer — for building out the sales team and the company’s focus on revenue generation for the successful raise.
“Our focus this year turned into how to grow the business on the revenue side,” he said. “If you are profitable and fast-growing you can always control your own destiny. With capital markets the way they are, we wanted to remove that barrier. We figured out a great business model internally and drove that to market.”
Engelbrecht noted that he paused his fundraising for a couple of months to focus on revenue. Once revenue took off, investors became interested.
“We had over 10 VCs looking at the deal. For us, once we got to April and May and were beating (projections), you become attractive to a lot of people,” he said, adding that raising money for growth is different than raising just to stay in business.
ToolBelt isn’t profitable yet, but expects to hit that goal next year.
Engelbrecht opted to resume fundraising and pursue investors over bootstrapping in order to find partners to help the company grow.
“I wanted to find partners who are experts in what I don’t know so they can help see around corners,” he said.
Engelbrecht has three goals for this funding: invest in sales and marketing including making a couple strategic hires; invest in the product roadmap and new features; and grow the brand and brand awareness.
“(We want) talented people in the industry to know ToolBelt is the place to go for new opportunities or to fund W2 and skilled tradespeople,” he said.
The company is starting to see a network effect and has hundreds of new users joining every day.
Even with higher interest rates the company is still seeing growth in its residential remodeling customers. This includes both traditional general contractors but also companies that do turnkey bath installations and window installations looking for talent on the app.
