Pantera Tools is raising capital via common stock at a $35 million valuation. The company’s valuation is very high given its early stage. While Pantera Tools has been bootstrapping its development efforts since 2009, it only recently managed to generate revenue and profit. In 2021, Pantera Tools earned $3.1 million in revenue. Its revenue-to-valuation multiple is average compared to other startups, meaning it is a fair deal for investors. Overall, Pantera Tools’ valuation is overvalued, but its average revenue multiple makes the deal more favorable.

Pantera Tools operates primarily in the US construction management industry. In 2022, the US construction project management services market is valued at $196.5 billion. From 2017 to 2022, the market grew by just 0.1% annually. In 2022, the market is expected to grow by a slightly better 2.5%. So though this market is large, it’s slow-growing. 

There are already a number of established competitors dominating the market, including Procore, Bidtracer, SmartBid, and monday.com. However, this is not a winner-take-all market. If Pantera Tools is able to differentiate itself and increase its brand recognition, it could still succeed in the construction management software industry.

Increased funding for real estate projects and real estate development startups will likely lead to more demand for bid management tools. In November 2021, Mosaic Building Group, a US-based construction tech startup, raised $44 million to automate the construction planning process. Such a massive Series B funding round indicates interest in the market and efforts to fuel its expansion. There has been additional interest in improving construction workforce management, which could be a niche for Pantera Tools to later explore. In October 2021, Procore acquired LaborChart, an up-and-coming startup providing workforce management software for specialty contractors and self-performing general contractors. 

Overall, Pantera Tools’ addressable market is currently large but growing at a sluggish pace. Although funding for real estate and construction management startups indicates the market could expand in the future, many established competitors already dominate the market. Pantera Tools will have to stand out among competitors in order to be successful, but it’s not clear the company will be able to.

Pantera Tools’ co-founder and CEO DeWayne Adamson is well versed in the construction and technology industries. His LinkedIn is sparse on details of his early career, but according to the Pantera Tools raise page, he began as a skilled tradesman, later becoming a project manager and then vice president of a prominent mechanical contractor. He ran more than 700 major construction projects and specialized in retail construction. As his career progressed, Adamson founded the first national permit expediting firm and a national maintenance company. He also co-founded a large retail construction firm, and all of these companies were supposedly sold.  Adamson co-founded Plan Express, a printing and construction document logistics company. In 2009, Plan Express was acquired by iSqFt, and Adamson launched Pantera Tools. Plan Express was repurchased in 2015 to become a part of Pantera Tools. 

Second co-founder and COO Bart Adamson is experienced in online and internet technology development. Adamson was instrumental in building out bid tools, a subcontractor network, and backend tools for Plan Express, and his software development skills are likely just as valuable to Pantera Tools. 

Collectively, Pantera Tools’ founders boast complementary skills and experiences, including prior exit experience, which will likely aid in the success of Pantera Tools. This team is well-qualified to create effective and simple construction management software. However, Pantera Tools suffers from a lack of expertise in sales, marketing, branding, and legal skills. Pantera Tools has the right team to develop its technology, but it’s unclear if this team can later grow a successful software company. 

Pantera Tools’ pre-launch product offers a combination of construction bidding and project management software. Its project management module includes job costing, scheduling, document storage and sharing, invoices and payments, custom reporting functions, and more. Its plan rooms are customizable to the specific project and company branding. Through white labeling the Pantera Tools product to match customers’ websites, general contractors and subcontractors can stand out among the competition and earn higher bid response rates. The Pantera Tools app also supports project management from anywhere. Pantera Tools’ product is targeting general contractors through a yearly subscription of around $5,000, although the company is vague about how it determines its prices. Pantera Tools’ second target, subcontractors, are able to make a free profile, and they can choose from three monthly subscription options that have different levels of features, ranging from $9.99 a month to $49.99 a month per user.  

Procore is a major competitor targeting general contractors that boasts a free trial, a quotation-based pricing model, and a subscription-based pricing model. Procore’s first tier costs $8,004 annually and offers very similar functions to Pantera Tools. The second tier is $10,440 annually but offers additional accounting features and offline connection abilities. The final tier is $14,184 annually and includes inspection, incidents, bidding, and observation options. Pantera Tools’ product is almost $3,000 cheaper than Procore’s most basic tier, and it targets both general contractors and subcontractors. However, since Pantera Tools generally seems to offer a less comprehensive range of features, its lower price point might not attract general contractors who want access to more services.

Monday.com has a complicated freemium price model with four tiers of paid subscription plans that vary based on the number of users, with monthly subscriptions being slightly more expensive than annual subscriptions. The first three tiers range in price from $96 per user (if billed annually) to $192 per user (if billed annually). The highest tier has a custom price, and it is the only option with a complete range of features, while the rest have fewer features and more restrictions. Monday.com offers project management tools at potentially cheaper price options compared to Pantera Tools. However, monday.com seems more geared toward general contractors than subcontractors.

Bidtracer offers bidding and project management tools designed for subcontractors. Its pricing is based on the number of users — $600 or less per user per year, depending on how many individuals are using a single plan. Its features appear to be comparable to Pantera Tools’, and unlike Pantera Tools, each of Bidtracer’s three tiers offers access to all modules. However, with the exception of its third tier, most of Pantera Tools’ subcontractor plans are cheaper.

In a market dominated by established competitors, Pantera Tools’ offering for general contractors seems to be neither the most comprehensive nor the most affordable option. Pantera Tools’ two main differentiators appear to be its focus on both general contractors and subcontractors and its white label feature. However, with no patents, Pantera Tools has no defensibility. It wouldn’t be hard for another company to adopt similar ideas. If Pantera Tools is unable to differentiate itself further and increase its defensibility, it may struggle to attract customers.

Pantera Tools has made noteworthy progress, especially considering it has been bootstrapping — or working on a small budget — since 2009. It has been working on adding product management extensions to its bidding product for the past four years. According to the company, Pantera Tools wins contracts at competitive demos (product demonstrations) more than 75% of the time. Pantera Tools has also grown a strong customer base, with an impressive 92% retention rate in 2021. To date, Pantera Tools has acquired more than 300 midsize to large general contractors as customers for its bidding product, and 800,000 subcontractors are in its database. Pantera Tools has also strategically partnered with several companies, including The Blue Book Building & Construction Network, Dodge Data & Analytics, and eTakeoff.

While the company is still in a pre-launch phase, Pantera Tools boasted revenue of $3.1 million in 2021, which rose slightly from $2.8 million in 2020. Moreover, Pantera Tools has even been profitable, with a net income of $80,703 in 2020 and $249,287 in 2021. Pantera Tools’ strong revenue and early-stage profitability are both positive signals for investors.

Overall, Pantera Tools has strengthened its customer base and secured partners, and its robust financials are a promising signal for potential investors.  

Pantera Tools is overall a low-risk investment given its pricing — which is more moderate compared to some competitors — and strong early performance. Pantera Tools has some market risk due to the competitive nature of the construction management software industry and the company’s limited differentiators. With no patents, Pantera Tools has no real defensibility. Other competitors could easily replicate similar ideas and software tools, making it even more difficult for Pantera Tools to attract customers. The company may greatly struggle to stand out among established and trusted brands. While Pantera Tools has been bootstrapped since 2009, it is only now beginning to gain market traction.    

Pantera Tools’ team risk stems from its very small team that lacks expertise in sales, marketing, branding, and legal fields. Pantera Tools has the right team to develop its construction management software, but it’s unclear if this team can later launch and grow a successful software company. Pantera Tools might need to bring on additional team members to fill these gaps and decrease potential team risk. 

Since its founding more than a decade ago, Pantera Tools has committed considerable time to developing its technology and product offering. But it faces stiff competition. Pantera Tools operates in a large but slow-growing and crowded market, where legacy brands dominate. Name recognition is often vital to ensure product adoption and brand loyalty. Pantera Tools could struggle to convert customers if its marketing and branding efforts fall short. To avoid being one of many, Pantera Tools will need to further differentiate itself moving forward and continue acquiring more of the market share. 

Pantera Tools’ team also lacks experience in marketing, sales, branding, and legal efforts. If Pantera Tools fails to bring on new team members to support these efforts, it might struggle to grow in a timely manner and acquire new customers.  

Pantera Tools’ revenue has grown significantly to $3.1 million in 2021, and it generated a profit of $249,287 in 2021. Pantera Tools’ financials are impressive, especially since its product is in the pre-launch phase. 

The competition in the construction project management services industry is fierce, but since it’s not a winner-take-all industry, Pantera Tools could find success if it distinguishes itself among competitors. Pantera Tools’ customer base seems to be strong. The company currently wins contracts at a rate of more than 75% during demos against its competitors. In 2021, its early customer retention rate was more than 92%. Such a high rate is very uncommon and offers a testament to Pantera Tools’ product offering. 

Additionally, the construction management software industry has other niches for Pantera Tools to expand into with its growing customer base, including construction workforce management, payroll automation, and organizing tax documentation. The company’s offering helps both subcontractors and general contractors, making it more competitive than those services that focus solely on general contractors. Under the guidance of a CEO with prior exits, Pantera Tools may have what it takes to achieve success. 

Pantera Tools is a construction management software company that offers bidding, project management, and field communication solutions. The founding team is experienced and knowledgeable, but it lacks additional support for sales, marketing, and legal efforts. There are many competitors who offer similar products — and some better prices — making the market difficult to tap into. 

However, Pantera Tools seems to be gaining important early traction. The company has significantly grown its customer base and partnerships. It has started to demonstrate a product-market fit and is working to further expand its offering to meet the needs of customers. Pantera Tools achieved profitability, and the company has exceeded revenue growth expectations. The company’s revenue-to-valuation multiple is decent, a plus for investors looking to support Pantera Tools as it fully launches into the market. For these reasons, Pantera Tools is a Neutral Deal. 

For questions regarding the KingsCrowd analyst report or ratings for this company, please reach out to support@kingscrowd.com. 

Analysis written by Carolyn Price, May 12, 2022.