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Tokyo-based Truss, providing a building material comparison web service under the same name, earlier this month announced that it had raised 100 million yen (about $890,000) in its latest funding round. The investors of this round include DBJ Capital, Innovation and Future Creation, GMO Venture Partners, SMBC Venture Capital, Minoru Moriya (former Vice President of Japanese fabless printing startup Raksul), Hidetoshi Takano (CEO of Key Players) and Hideto Fujino (CEO of Rheos Capital Works). In addition to the participation for the investment, Moriya joined the management advisory board.
Truss was founded by Shuji Kubota, Tetsuya Okimura and Kouki Hirakawa in February of 2014. Since the three are all graduates of Tokyo Institute of Technology (TokyoTech), the firm had acquired designation as a TokyoTech-originated venture. The firm had been managed in bootstrapping mode, securing money by loan or grant of Japan Finance Corporation, so that it is the first equity financing from external organizations for the firm.
The Truss platform covers information related to building material products handled by various manufacturers. Generally, information about building materials is provided to builders in the form of heavy catalogues via trading companies, but it is not easy to compare these information across different manufacturers because the content is not unified with a single standard. Thereby, building materials are often chosen based on builders’ experience or custom, and the choice tends to depend on a supply chain of a specific manufacturer.
Truss makes all these information about building materials into a database and provides it as a web service. Currently, it mainly covers building exterior, and will add information about facilities, external structure and interior in the future. These information is shown alongside basic information such as fire-resistance capacity in line with government regulations or wholesale price as reference information.
Interestingly, information about building materials cannot be managed as database not only by trading companies but also by manufacturers, and all of it depends on paper catalogue. Truss acquires catalogue-based information from manufacturers and takes on database construction almost manually. The web service is initially positioned as a portal for manufacturers to promote their products to constructors but is desired to be used even by manufacturers or trading companies, yet they are the information source due to usability convenience upon handling product information as a database.
By the way, looking at the history of the Internet, most of the product comparison websites tend to gradually change into marketplaces where a certain amount of profit can be expected. So I asked Kubota about this possibility and he answered that it will be far into the future for Truss to become a marketplace due to several problems.
In the building industry, all payment related to materials is done when transferring the building to the owner after completion. Between material manufacturers and constructors, trading companies mediate and approve deferred payment from the constructors. If the firm aims to establish a marketplace, new business practice is needed to make manufacturers accept deferred payment or constructors, advance payment.
Furthermore, unlike MonotaRO (TSE:3064) which is ahead of other competitors as a market dealing materials or parts or Misumi Group (TSE:9962) which is said to handle 80 sextillion parts (one billion times 80 trillion), logistics capable of delivering comparatively big products to construction sites according to schedule are needed. Currently, only trading companies have the ability to achieve this operation.
The digital transformation of building industry seems to take a long time due to its conservative nature, but Kubota told us that the horizontal service permeation will be possible if it is understood by a portion of the manufacturers, because the Japanese building industry shows more concentration and is in an oligopolistic state compared to those in Western countries. The firm is going to use the acquired money to secure corporate sales staffers who have experience in building design or can enter the building material manufacturing industry.
According to Kubota, Moriya who participated as an angel investor and also became Management Adviser of Truss had once hit upon an idea of marketplace for the materials industry. He gave it up then because he did not know how to do that, so he may entrust his past dream to the firm through his participation.
Translated by Taijiro Takeda
Edited by “Tex” Pomeroy