What's one way to bring down the cost of housing?
Make it easier for businesses to build homes. Miami-based startup Rigor plans to do with that with the help of blockchain technology.
The company, a decentralized finance platform for construction lending and payments, secured $3.5 million in seed capital in a financing round supported by investors such as Agya Ventures, Bain Capital Ventures and Flow Ventures.
Home developers often seek financing from a small number of specialty lenders, limiting loan volumes. Payments to builders, home contractors and subcontractors are often delayed, as well: Rigor reports those professionals wait an average of 80 days to be compensated for their work.
Decentralized finance refers to a system that offers financial protections without intermediaries like banks by using smart contracts stored on a blockchain, a shared digital ledger of transactions.
According to CEO Isaac Lidsky, Rigor's decentralized finance protocol will "free homebuilders from cumbersome and restrictive financing practices that needlessly hold back the supply of new and desperately needed housing."
With Rigor, lenders can find and fund construction projects and negotiate terms with builders – all governed by smart contracts secured on a blockchain. Payments are automated and sent to the builder as they complete tasks, ensuring small businesses are immediately paid for their work. When the home is eventually sold, the lender is repaid a fixed-yield rate with interest.
Rigor's capital infusion will be used to hire, bring the platform to new markets, and make its software open source.
The beta version of Rigor's platform is live and in use by digital asset lenders and homebuilders in Central Florida, according to a news release.
"Rigor tools and technology allow us to engage with and grow lending partnerships and streamline our operations," said DK Kim, operating partner of FL Pro Brokers, one of the companies using the beta version. "The result is that we can build more homes with fewer headaches, and deliver for more homebuyers."
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