Parspec Raises $20M to Revolutionize Construction Procurement with AI

A San Mateo company is transforming how the construction industry manages product selection, quoting, and submittals, one of its most time-consuming and error-prone processes. Last week, Parspec raised $20 million in Series A funding to accelerate its AI-powered procurement platform that promises to cut bidding time and costs in half for wholesale distributors and sales agents.

The funding round, led by Threshold Ventures (formerly DFJ), brings Parspec's total raised to $31.5 million since its incorporation in 2020. The company has experienced remarkable 4x revenue growth over the past 12 months and now supports 288 customers, including four of the five largest electrical distributors in the United States. CEO and co-founder Forest Flager announced the funding on LinkedIn, calling it a major step toward modernizing the construction supply chain.

Parspec’s cloud-based platform uses AI to automate product selection, quoting, and documentation for construction distributors. By turning complex specifications into actionable product matches, it simplifies a traditionally manual, labor-intensive workflow that relies heavily on tribal knowledge and disconnected systems.

AI Meets Construction's Analog World

The global construction industry represents a $16 trillion market, with over $5 trillion flowing through the materials supply chain. Despite this massive scale, much of the industry still relies on outdated procurement processes managed through email and phone calls. These methods result in labor costs that are double those of comparable industries like auto parts and electronics.

Parspec's solution addresses this inefficiency head-on. The company has developed cutting-edge multimodal AI models that extract technical requirements from design drawings and specification documents, then instantly identify spec-compliant products from a database of over 6 million construction products. To ensure their catalog remains current and comprehensive, Parspec has built an automated data pipeline that crawls approximately 4,000 manufacturer websites daily, indexing PDF product documentation and organizing product information using AI and machine learning models.

"This enables customers to cut time and cost to bid in half, while simultaneously improving bid quality and compliance, enabling them to bid and win more projects," explains Forest Flager, CEO and co-founder of Parspec.

The Stanford-educated entrepreneur previously led the software team at Katerra, a SoftBank-backed construction tech company, where he gained deep insights into material purchasing mechanics and distributor information systems.

To see how Parspec’s platform works, the company has released a short demo video walking through how its AI tools simplify product selection, quoting, and submittals.

Proven Market Traction and Customer Success

Parspec has quickly established itself as a trusted platform within the electrical distribution industry, securing adoption from major players such as Graybar, Rexel, Border States, U.S. Electrical Services, and Crescent Electrical Supply. Together, these companies represent more than $70 billion in annual sales, underscoring the platform’s growing relevance and reach.

Customers are reporting faster quote turnaround times, improved bid accuracy, and greater operational efficiency. At U.S. Electrical Services, teams are now able to pursue more projects without expanding their workforce. Graybar has also seen measurable improvements in how its teams prepare bids and interact with clients, resulting in a stronger customer experience.

This momentum reflects Parspec’s ability to streamline traditionally manual and fragmented workflows, offering a compelling advantage to companies operating in a high-cost, competitive construction market.

This growing adoption is powered by how effectively Parspec’s platform turns complex, scattered data into actionable insights. The visual below outlines how the system captures documents like specifications, pricing sheets, and warranties, uses AI to interpret them, and delivers faster quoting, smarter product recommendations, and automated submittals.

Strategic Expansion and Future Vision

Today, Parspec’s core offering includes tools for AI-powered product matching, quote generation, and automated submittals. With the new funding, the team aims to extend these capabilities even further.

Parspec plans to invest the majority of its Series A capital into product development, focusing on two main areas: Distributor Order Management and a Contractor Portal. The Distributor Order Management system will provide an end-to-end solution for the project order lifecycle, including quote, submittal, and fulfillment phases. Meanwhile, the Contractor Portal will offer construction material buyers live access to project documents, order status, delivery tracking, and real-time communication tools.

"We're excited to partner with Threshold to accelerate our mission to enable a more connected and efficient construction supply chain," states Flager. "With this new funding, and in close collaboration with our existing customers, Parspec plans to expand our platform to support the full order lifecycle and to create a unified digital environment for collaboration between contractors, distributors, sales agents and manufacturers."

Threshold Ventures sees Parspec’s platform as a timely and transformative solution for one of the construction industry’s biggest inefficiencies. With proprietary datasets and fine-tuned generative AI models tailored to the procurement space, the company has built a defensible advantage in automating material selection and quoting. This AI-native approach creates a strong data moat and positions Parspec to unlock significant value for its growing customer base.

With construction material prices approximately 40% higher than they were in 2020, the need for a more agile and efficient construction supply chain has never been more critical. Parspec's AI-driven approach marks a major shift in how construction materials are sourced and managed, with the potential to deliver substantial cost savings and efficiency gains across the trillion-dollar construction supply chain.

As AI continues to reshape industrial workflows, Parspec’s momentum signals that even the most traditional sectors are open to change when the right solution comes along.

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