One of the region’s most active investment firms is once again hedging its bets on Miami.
Tampa-based Florida Funders, a crowdfunding/angel investing hybrid, announced Tuesday it participated in a $5 million pre-seed round for Miami-based Togal AI. Coastal Construction in Miami also participated in the round, along with undisclosed investors.
Togal AI is in the splashy artificial intelligence space, using AI to automate the construction estimate process.
“This is one of the more innovative applications of AI we’ve seen for a growing industry ripe for disruption,” said Saxon Baum, partner at Florida Funders, in a statement. “[Togal AI’s CEO] Patrick [Murphy] ’s deep, firsthand knowledge of the construction industry’s ins and outs make him the ideal founder Florida Funders wants to back.”
Togal AI uses machine learning to automatically measure the square footage of a space with 97% accuracy to help contractors like electricians and plumbers make estimates. That work is typically done manually in the industry, a process that can take weeks.
With Togal AI’s software, room measurements can be completed in less than 10 seconds. That makes it possible for general contractors and subcontractors to respond to more construction proposals and bid on more jobs.
It’s a departure from the estimating process that founder and CEO Murphy said he learned from his grandfather 25 years ago.
“We used rulers, rollers, highlighters and a calculator to perform take-offs. Then the industry moved to computers, where we manually used a mouse to measure each space,” Murphy said in a statement. “It’s beyond exciting to now bring AI to the industry.”
Murphy started Togal AI in 2019 with seed funding from Coastal Construction, which was founded by his father, Thomas P. Murphy. Before that, he represented Florida’s 18th congressional district from 2013 to 2017.
Togal AI now works with 25 contractors, with clients that include Stiles, Total Flooring, Coastal Construction and Clark Construction. Last year it won the grand prize at the 2022 eMerge Americas Startup Showcase, where it snagged a $420,000 investment.
The construction industry was forced to innovate during the Covid-19 pandemic due to supply and labor shortages, Murphy said. That created more demand for less labor-intensive solutions, such as Togal AI’s estimating software. The global construction technology industry captured $5.38 billion from venture capital and private equity investors in 2022, according to a report from venture capital firm Cemex Ventures. More than 40% of all construction tech investment dollars went to ventures headquartered in the United States.
“Construction is at an inflection point, and I believe the next decade will be transformative,” Murphy said.
The latest investment for Florida Funders adds to its growing Miami roster. It also invested in a $50 million round for Betr, a $4 million round in HealthSnap and an undisclosed amount in Gemini Sports Analytics. The firm also opened a Miami office in 2021.
