For CEO Ann Hand, the hardest part about building up Project Frog, a company that creates ready-to assemble “smart buildings,” was convincing venture capitalists and customers that it was indeed possible to disrupt the long-stagnant construction industry.
“You would look at construction and say, because nothing has changed in 1,000 years, it should have all the makings of the right [industry] to disrupt,” Hand says. “But in the early days, it made it more challenging to get customers and VCs to jump.”
While sectors like the auto and aerospace industries, a mere century or so old, have evolved quickly—working to improve speed, cost, efficiency and other metrics throughout their comparatively short histories—the basic processes of construction have remained relatively the same since Roman times, Hand says. Seven years ago, Project Frog was ready to bring the same evolution to construction, creating energy-efficient, economical, and attractive building components that contractors and construction crews could assemble quickly. It’s seemed like a no-brainer. But initially, funding was a hard sell.
“It’s a fear factor for VCs, because it’s always been done a certain way, it’s too hard of a hill to climb. How are you going to get these construction dinosaurs to think your way?” There were also concerns that architecture firms and construction companies might see Project Frog as a threat to their businesses.
Customers were no easier to convince. The company was founded in 2006 in response to the proliferation of portable buildings in California’s K-12 education system. Project Frog wanted to create bigger buildings that weren’t limited to the size of the truck they would roll in on, provided more light for a better learning environment, required less energy to operate, and would outlast the 20-year expiration date on most portables. To do it, the company uses innovations such as higher-performance materials; bigger clerestory windows, to provide more natural night in their structures; and Lantana Luminaire fixtures for more energy-efficient lighting. Selling the building in its component pieces and flat-pack shipping (just like furniture from Ikea) means bigger buildings can be shipped on the same flat bed trucks.
But even though the earlier generation of portables weren’t an ideal solution for schools, switching to something unknown was a hard sell. No one really enjoys the process of construction, Hand says, and if you’re a school district looking to build a high-cost item like a brand-new school, it’s “too big of a buying decision to take on too much change.”
But Project Frog’s successes have assuaged some fears, as school districts like South San Francisco Unified and Redondo Beach Unified and entities from 7-11 to Dow and various parks have put up the buildings. The architects and contractors who actually assemble the buildings—the company simply makes the component parts—have come to see Project Frog as a partner and new source of business, Hand says. (Returning builders also like to time themselves to see how fast they can put up the structures.)
Now, with a pipeline of repeat customers and previous funding rounds from big names like GE Energy under its belt, it’s becoming far easier for Project Frog to convince potential investors to go along for the ride. Last month, the company raised a Series D round of $20 million from CCM and McNally Capital, for a total of $50 million.
Though the company was first started with school buildings in mind, Project Frog has also focused on the health care industry. As Obamacare rolls out, the newly insured will add new patients for health facilities outside of
