“The technology used by the sell side of the industry has been relatively the same for a few decades now… but this workflow is highly specialized.”
– Forest Flager, CEO and co-founder of Parspec
Dealing with slow, manual procurement workflows, sales agents and distributors struggle to match customer specifications to products, suppliers, and documentation.
Parspec, a California-based startup founded in 2021, is betting that its AI-native platform can untangle this mess. The company recently announced a $20 million Series A funding round led by Threshold Ventures, bringing its total funding to $31 million. Its product: an AI-native platform for construction materials procurement, starting with mechanical, electrical, and plumbing (MEP) systems: segments that account for a quarter of U.S. construction material spend.
Flager and co-founder Pratyush Havelia were doctoral students at Stanford, building design optimization models. Their goal was to make building designs more efficient by using data like performance specs and environmental impact. But they quickly ran into a major obstacle: finding and maintaining accurate, up-to-date product data across millions of SKUs. They built a suite of web crawlers to automate the process, with the solution eventually evolving into a commercial product.
Pushing Into Fulfillment and Contractor Tools
The $20 million Series A will fund the next phase of product expansion. Parspec plans to move beyond bidding and submittals to cover the full order lifecycle. Two new components are in development: a Distributor Order Management module and a Contractor Portal. The first will support fulfillment, delivery, and tracking, while the second will provide live access to order documents and communication tools for buyers. Pilot testing is underway, with commercial release expected by the end of 2025.
In terms of business model, Parspec licenses its cloud-based software platform to distributors and sales agents. Its value proposition hinges on enabling users to bid on more projects, generate higher revenue, and reduce the non-revenue-generating labor historically required for quoting and documentation.
Parspec is vertically focused, building for the specific workflows of construction materials distribution. This specialization allows it to integrate domain-specific features, such as extracting product information from architectural plans or tailoring submittal packages to comply with regional codes.
In the past year, Parspec reported a fourfold increase in revenue and working with hundreds of sales agents and distributors. Its customers include four of the five largest electrical distributors in the United States, such as Rexel, Graybar, and Crescent Electric Supply.
Parspec claims its customers have achieved 50 to 100% improvements in labor productivity.
Positioning in a Slow-to-Change Industry
Companies like Procore have gained traction on the general contractor side, and a range of SaaS startups are attempting to digitize different aspects of construction logistics and project management. Parspec’s focus on the “sell side” of procurement: distributors, manufacturers, and sales agencies, along with its emphasis on AI-driven product matching, could set it apart from most generalist platforms.
The challenge ahead is twofold: execution and adoption. Even with compelling ROI figures, the construction industry has historically been slow to change. Procurement workflows remain distributed across regions and product categories, and digitization efforts often stall due to lack of interoperability or staff retraining burdens.
Still, if current growth holds, Parspec may have found a wedge. Its decision to work directly with large distributors and involve them in product design could ease adoption frictions. Plus, its ability to continuously ingest and structure product data from thousands of manufacturers positions it to scale across categories.
