Information on the Target

Source is a B2B marketplace specifically designed to connect architecture and design clients with suppliers. By providing a managed platform, Source enhances the procurement process for furniture, fixtures, and equipment (FF&E) within the commercial construction industry. It boasts the world's largest FF&E catalog and serves as a well-recognized brand in its sector, positioning itself as an essential tool for architecture and design firms.

With over 65,000 architecture and design firms operating in the United States, Source aims to streamline their workflows by integrating a range of functionalities into its platform. Users can create FF&E plans, place orders, examine inventory, manage budgets, and track lead times efficiently, all from a single interface. This comprehensive offering addresses the pervasive complexities of procurement in commercial construction.

Industry Overview in the Target’s Specific Country

The commercial construction industry in the United States is a massive market worth $500 billion. However, it faces challenges such as opaque processes, high costs, and prolonged timelines, particularly in the procurement of FF&E. Traditionally, designers and architects grappled with lengthy purchasing processes, often facing unpredictable fees and delays.

In recent years, the industry has begun to shift towards digital solutions that promise greater efficiency and transparency. As more firms recognize the importance of technological integration, platforms like Source are emerging to mitigate common pain points, ultimately reshaping the procurement landscape.

The integration of AI and automated design tools within Source's platform represents a significant advance in catering to the needs of design professionals. By allowing for rapid compilation of extensive purchase orders and real-time communication between suppliers and buyers, Source responds directly to the evolving demands of the industry.

As the COVID-19 pandemic has accelerated the need for digital transformation across various sectors, the construction industry is no exception. Companies that adopt integrated solutions are likely to gain a competitive edge, indicating a favorable environment for Source’s growth and expansion.

The Rationale Behind the Deal

Our investment in Source was largely driven by overwhelmingly positive customer feedback from architects, building owners, and designers. The engagement data indicated a high level of satisfaction and readiness among users, many of whom expressed a desire for further collaboration. This enthusiasm highlighted Source's potential to address significant pain points in the procurement process.

The company’s vision, led by CEO Nicole Schmidt, particularly impressed us. Her understanding of both construction and design, coupled with her belief that technology can improve the procurement experience, illustrates a forward-thinking approach that aligns with our investment philosophy.

Information About the Investor

M13 has taken a leadership role in Source’s recent $8.5 million Series A funding round, investing alongside established partners such as Rogue Venture Partners, Oregon Venture Fund, Rise of the Rest, and Founders’ Co-Op. This diverse coalition of investors brings a wealth of expertise and resources, opening doors for Source’s future growth.

Our investment reflects a commitment to supporting Source as it expands nationally. Representing major markets including Los Angeles and New York, M13 aims to facilitate Source’s transition into new territories, fostering its evolution as a critical component of the construction industry.

View of Dealert

From an expert perspective, the investment in Source appears to be a sound decision fueled by its innovative approach to procurement and significant customer demand. With the increasing complexity of FF&E sourcing in commercial construction, Source is well-positioned to serve a growing market.

The leadership quality of CEO Nicole Schmidt adds a compelling factor to the investment. Her dedication to enhancing the construction process through technology resonated strongly during our meetings and aligns well with our vision for impactful industry solutions.

As Source continues to integrate advanced functionalities into its platform, such as AI-driven design assistance, the potential for operational efficiencies expands. This positions Source as a crucial player amid industry shifts towards digitization, heightening its investment appeal.

Overall, we believe that Source's unique marketplace and robust customer feedback underscore its potential for long-term growth, making it a highly promising investment opportunity.

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