Platform

A company disrupting the construction industry.

Key deal points
  • Minority-owned.  Experienced real estate developer with diverse workforce
  • Construction technology.  Disrupting the delivery of building platforms
  • Already underway.  Operational with anticipated distributions by 2023
  • Pipeline activated. First project underway and more onboarding
  • Funded.  $1 million in investments raised in previous offering
  • Investment. Equity share of company, valued at $25M
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About the problem

In a construction project, the word ”platform” can be used to refer to the foundation and base podium of the structure. Platform delivery today is flawed, overly complicated, inefficient and ignored. It’s the biggest pain point in the real estate industry. We plan to change the paradigm. Our company will provide fully integrated services to deliver platforms seamlessly and efficiently, at lower cost, and at fast speed.

Platforms cost too much, take too long to build and are often delivered with errors. This is because permitting, insufficient site assessment, unforeseen conditions (think contaminated or structurally unsound soil), and poor coordination can lead to day by day delays and explode costs. The current platform delivery process requires assembling an ad-hoc network of many entities and contractual relationships including architect, engineers, subcontractors and specialized consultants.

Currently, constructing a building is managed as one process, starting in the ground and building up to the roof. We plan to split that process into two --- above grade (the “vertical”) and below grade (the “platform”). Our focus is on fast and efficient delivery of the platform, thereby reducing the cost and increasing the speed of construction.
Platforms are invisible once they’re completed, but they are a crucial part of the building process, costing on average, by our estimates, 23% of the total construction cost and requiring up to 40% of the time to build.

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What Platform Does
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About the solution

Platform USA LLC (“Platform” or the “Company”) has designed The Platform Method, a construction tech innovation and integrated system solution. Our plan is to be a “one stop shop” for Platform delivery. In order to scale services quickly, the Company plans to acquire a number of reputable, medium-sized companies that currently service the industry. We plan to have 60% of platform services in-house by the end of 2022 and 100% by the end of 2023.

We believe the Platform Method has three clear advantages:

Cheaper. Integration of major entities and processes to create synergies and increased market share to create economies of scale.

Faster. Improved coordination of existing techniques and the introduction of new technologies and techniques to design and produce platforms faster.

Better. Single point of contact / responsibility and singular focus to reduce errors and improve quality.

Platform plans to offer an integrated system solution. This is our “secret sauce.” When a customer engages Platform, all aspects of the platform design and approval are integrated into the process to deliver a building platform ready to accept the vertical section on top of it. We handle:

Site Assessment. Environmental and geotechnical testing.

Permitting. Permit expediting; structural/civil engineering; building, green and utility consulting.

Site Preparation. Earthwork, sheeting and shoring; demolition; environmental remediation; trucking and surveying.

Platform Construction. Concrete and site utilities; waterproofing; below grade plumbing and electrical; and masonry.

“If Platform can deliver what they are promising, they will have a line of customers stretching down the block” - Brian McLaughlin, Enterprise Community Development.

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About the change

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About the business model

How will we accomplish this?  We expect the Platform Method to be an iterative process that incorporates developing, implementing, and perfecting the following steps:

Step One. Build the team

We’re assembling a combination of visionaries and industry practitioners with deep knowledge. See About the Team for the current executive team and board advisors. 2022 is expected to be a year of significant organizational growth, as first projects and acquisitions come on line.

Step Two. Choose and implement the systems

We’ve invested in technology to create robust, scalable systems and processes to enable efficient growth. Technologies already implemented include Procore (a construction management system), Salesforce for project pursuit tracking and Asana for general task management. 

Step Three. Secure the project pipeline

We’ve entered into a master agreement with Neighborhood Development Company (“NDC”), owned by our founder Adrian Washington, to deliver the platform for NDC’s project pipeline. NDC’s pipeline is expected to be two to three projects in each of 2022 and 2023, providing us with projected revenue in excess of $15 million. 

We  are negotiating with several other developers and general contractors, to reach our goal of four to five additional third-party projects in 2022, adding $8-12 million in revenue.

In addition, we are a Certified Business Enterprise and minority owned, providing us with an additional advantage in winning certain contracts, especially those with government funding.

As to the pipeline, our first project located at 218 Cedar Street in Washington, DC, is under construction. We expect it to demonstrate our capacity to deliver The Platform Method profitably. For this project, we are providing the following services to the project - demolition, sheeting and shoring, earthwork, dry utilities, wet utilities, concrete, surveying and landscaping.

Platform helped to reduce the platform budget for this project from $3.7 million to $3.0 million.

Step 4. Acquisitions

Generating the capability to efficiently and cost competitively deliver the elements of the platform is central to the Platform Method. Platform has thoroughly studied the Washington DC ecosystem of subcontractors, and has identified numerous potential acquisition targets in the right trade specialties.

We plan to prioritize acquisitions in the following manner:

  1. Company acquisitions that provide capability in central Platform activities such as demolition, earthwork, sheeting and shoring, concrete, dry utilities and wet utilities.
  2. Company acquisitions that provide capability in ancillary Platform activities such as geotechnical assessments, environmental assessments, geothermal systems, and permitting.
  3. Secondary company acquisitions that increase market-share in central Platform activities, growing our ability to scale.

We’re in discussions with one company that we expect to acquire and have feelers out to several others.

Step 5. Integration

Once companies are acquired, we’ll be able to focus on better integration of workflow, more aggressive pricing, better risk mitigation and improved margins.

We expect to manage each company acquired as a subsidiary, with its own natural ebb and flow of work, which means underutilized assets at times, and costly surge provisioning at other times. With multiple companies in our portfolio, we’ll be able to smooth peaks and troughs by borrowing/lending equipment and labor resources. Platform plans to leverage economies of scale across its portfolio, investing in and implementing new technologies and processes.

Step 6. Talent acquisition
Platform envisions a portfolio of many companies with a broad reach of activities, and many leadership opportunities. Each company will retain some autonomy, potentially providing ownership opportunities within it. Thus, Platform plans to offer a unique career development pathway for construction leaders. Unlike either big construction companies, where it is difficult to rise quickly and take on greater responsibility and title, or small companies, which have lower pay scales and limited opportunities, Platform will be positioned to  attract ambitious and capable pioneers.

Moreover, as both a Black-owned and Spanish language speaking company, we plan to reflect and elevate this diverse workforce and population. 

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About 218 Cedar Street
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About the market

“Construction is the biggest industry in the world ... but in the past couple of decades it has been plagued by dismal performance … annual productivity growth over the past 20 years was only a third of total economy averages ... A changing market environment, technological progress, and disruptive new entrants will trigger industry overhaul”.

Construction today is characterized by two different competitive archetypes - large, bloated, sophisticated contractors fighting over very thin margins for big, iconic projects, and mom and pop, home grown contractors that are under-capitalized, lack economies of scale, and struggle to adopt best-in-class practices and systems. Mid-size real estate developers have to choose between paying high prices for the former, or “settling” for the headaches of the latter.

At the project level, buildings, potentially unique in many ways, are created from additionally unique circumstances of each job site. Developers choose their general contractor, who then assembles a vast team of subcontractors, engineers and consultants to implement the project, with each player inherently adversarial to all others, and the general contractor left to try and minimize the possible downside of this ad hoc union of players. The general contractor, at best, becomes a specialist in management, but completely at the mercy of the subcontractors and their self-protecting interactions. In practice this means that most projects come in over budget and behind schedule.

This is how it is, but it doesn’t have to be that way.

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About the team

Platform is a triple bottom line company. We believe that the goal of making profits must be balanced with the concerns of our people and the health of our planet.

Our people will be diverse. We are Black-owned and our workforce will reflect the communities we work in, including traditionally hard to employ demographics. 

We’ll be kind to the planet. We will employ industry - leading “green” technologies and plan to provide a carbon neutral offering for all of our projects by 2026.

We plan to make a profit. Our strategy will provide multiple paths for revenue growth and profitability. We’ll combine the upside of a high-growth “concept” strategy with the downside protection of a “value” strategy.

Adrian G. Washington serves as CEO of Platform USA, LLC. He has 30+ years of experience in urban real estate development, construction, and management and has led the start-up of three private companies and one public-private entity. He is the founder and CEO of Neighborhood Development Company which he founded in 1999. From 2005 until early 2007, Adrian took a leave of absence to serve as the President and CEO of the Anacostia Waterfront Corporation (AWC), the entity charged with leading a $10 billion, 20-year initiative to revitalize Washington, DC’s Anacostia Waterfront and surrounding communities.

Adrian grew up in the city’s Anacostia neighborhood and is a lifelong resident of DC. He received his B.S. in Economics and Political Science from Stanford University and his M.B.A. in Marketing and Finance from the Harvard Business School. And he has received numerous individual awards reflecting his leadership in the development industry. Adrian will be responsible for continued capital raising, guiding the vision, setting the milestones, delivering early projects as an arms-length client, and leveraging current and potential relationships to help build the coordinated solution for the Platform Method.

Alex Shewchuk serves as COO of Platform USA, LLC.  He has been a real estate developer and/or real estate CFO in the Baltimore/Washington region for more than 15 years. Alex will be responsible for building the company, setting up systems and processes (they will use Wick’s Traction methodology), delivering projects, running back office functions (Finance, HR, IT), implementing the innovative thinking for the Platform Method, lead on technology integration, and lead on acquisition integration. He is a Yale undergraduate and Wharton M.B.A. ’01.

The leadership team is joined by a board of four advisors - Bill Keating, founder and CEO of Waste Acquisition Group; Karim Zia, Managing Partner and co-founder of DC Community Ventures; Sean Pichon, Partner and Owner at PGN Architects PLLC and Phyllis Caldwell, Independent advisor and sole member of Wroxton Civic Ventures LLC.

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About the finances

We estimate that the Company will have assets of approximately $35 million and net income of over $10 million at the end of five years. Start up operations and company acquisitions have been and will continue to be funded by seed equity in the early years. That equity has been raised from our founder and through a friends and family offering, and will be supplemented by this Reg CF offering. We expect company acquisitions to be supported by some bank debt with additional institutional equity as the Company grows.

Since we started operations in 2020 we have deployed founder equity of $30,000 and $352,667 of the additional $915,000 raised. $208,892 of revenue has been earned to date. We expect to expand our employees from 2 to 10 in 2022, purchase 1-2 companies, and complete our first 5-7 projects.

As we grow we’ll be able to fund our operations through cash from revenues. We may raise additional equity, most likely institutional, or borrow more money, to fund further acquisitions. If we do not raise our maximum goal in this offering, we plan to slow our acquisition timeline and/or supplement our sources with mission driven debt, additional high net worth equity, or institutional equity.

The table below reflects our projections for the Company over the next five years:

Sources 2022    2023 - 2026
Seed equity remaining $532,333 $921,936
Small Change investors $1,000,000  
Cash from operations $1,144,441 $32,840,606
Cash from acquisitions   $4,916,731
Total $2,676,774 $38,679,273
     
Uses     2021 - 2022     2023 - 2026
Company acquisitions + acquisition costs $740,000 $1,321,936
Payroll $607,877 $8,037,767
Professional fees $60,000 $250,000
Marketing $50,000 $1,000,000
Office expenses $36,840 $650,000
Financial, accounting + legal $40,000 $200,000
Financing costs $70,000 $10,000
Technology $45,000 $400,000
Equipment   $1,250,000
Research + development   $1,000,000
Investor distributions   $8,465,976
Residual loan balance $1,027,057 $16,093,594
Total $2,676,774 $38,679,273

In the early years, the Company will operate subsidiary companies separately and therefore keep separate financial books until eventually they are consolidated. Any returns from these subsidiary companies will flow up to the Company, and be added into overall returns.  Note that the Company will invest some equity into each subsidiary, to be supplemented by institutional (or other equity) and bank debt.

Acquisition sources and uses are expected to look as follows:

Sources 2022    2023 - 2026
Company equity $532,333 $921,936
Institutional (or other) equity   $14,086,8--
Bank debt (10 year amortization) $2,100,000 $18,060,000
Total    $2,840,000 $33,068,736
     
Uses     2022     2023 - 2026
Subsidiary acquisitions $2,800,000 $32,568,736
Acquisition costs $40,000 $500,000
Total    $2,840,000 $33,068,736

The Company expects to start distributing cash to Investors by 2023. If we choose to refinance, investors may be given the option of selling their shares. 

You can download and review detailed projections here.

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About the offering

The Company is engaged in a Regulation Crowdfunding (Reg CF) offering (the “Offering”) to raise money for a company developing an integrated system solution for delivering building “platforms.” 

We are trying to raise a maximum of $1,000,000, but we will move forward with the Project and use investor funds if we are able to raise at least $100,000 (the “Target Amount”). If we have not raised at least the Target Amount by11:59 pm on June 12, 2022 EST (the “Target Date”), we will terminate the Offering and return 100% of their money to anyone who has subscribed.

The minimum you can invest in the Offering is $1,000. Investments above $1,000 may be made in $250 increments (e.g., $1,250 or $1,500, but not $1,136). An investor may cancel his or her commitment up until 11:59 pm on June 10, 2022 (i.e., two days before the Target Date). If we have raised at least the Target Amount we might decide to accept the funds and admit investors to the Company before the Target Date; in that case we will notify you and give you the right to cancel.

After we accept the funds and admit investors to the Company, whether on the Target Date or before, we will continue the Offering until we have raised the maximum amount.

Investments under Reg CF are offered by NSSC Funding Portal, LLC, a licensed funding portal. You can download the offering packet here, or view it as registered on SEC.gov.
 

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Financial forecast

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About the return

The $1,000,000 raised in this offering will secure 4.0% of the ownership on a pro-rata basis. This equates to a valuation of about $25,000,000. For example, a $10,000 investor will become an 0.04% owner.

This offering follows the successful completion of the original seed fund raise of $915,000 at a valuation of $20,000,000. The financial projections plan for a Company net income in excess of $10 million for the fifth year, and an additional income of $6 million from acquisitions.  Using a conservative estimate of a 10x multiple for the income stream, the plan predicts a market valuation of $160 million for the Company after five years.

The Company targets distributing approximately $3 million above tax liability payments during the first 5 years.

Under the LLC Agreement, all distributions will be made pro rata based on the number of Class A Shares owned by each member. 

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About the risk

A crowdfunding investment involves risk. You should not invest any funds in this offering unless you can afford to lose your entire investment. 

In making an investment decision, Investors must rely on their own examination of the Companies and the terms of this offering, including the merits and risks involved. These securities have not been recommended or approved by any federal or state securities commission or regulatory authority. Furthermore, these authorities have not passed upon the accuracy or adequacy of this document. The U.S. Securities and Exchange Commission does not pass upon the merits of any securities offered or the terms of this offering, nor does it pass upon the accuracy or completeness of any offering document or literature related to this offering. These securities are offered under an exemption from registration; however, the U.S. Securities and Exchange Commission has not made an independent determination that these securities are exempt from registration.

There are numerous risks to consider when making an investment such as this one and financial projections are just that - projections. Returns are not guaranteed. Conditions that may affect your investment include unforeseen construction costs, changes in market conditions, and potential disasters that are not covered by insurance. You can download a more expansive list of potential risks here.

COVID19 Disclosure

We do not know how long the pandemic will last or how its effects will continue to ripple through the American economy. We could experience a short-term drop in cash flow and a dip in asset values as the economy adjusts further to a new reality. Or if construction were to slow down again because of another surge, we might risk or even forfeit investor equity. Based on the information currently available to us and the fact that 60% of the US population is now fully vaccinated, we expect to continue to grow the Company. Some of negative effects to our business operations in the short run might include:

  • Supply chain issues
  • Costs due to contract delays
  • A tight labor market with increasing costs
  • Slower than usual governmental approvals

Some positive effects may include:

  • Pent up demand for projects that were delayed over the last two years
  • A greater emphasis on affordable housing, a market targeted by Platform
  • More demand for general contractor services may increase profitability
  • Greater willingness by target companies to be acquired, given current uncertainty
  • More funds in the construction industry due to infrastructure legislation
  • Adoption of modular building models due to supply chain issues - a perfect fit for Platform
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Follow the change.