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Blokable, the Seattle-based startup aiming to transform how housing is developed, raised $23 million to expand its manufacturing capabilities as it gears up to kickstart new projects.

The startup manufactures modular smart home units in a warehouse in Vancouver, Wash. that can be stacked into multi-story projects once they are trucked to a project site. The company plans to open a second manufacturing facility, in Sacramento, Calif., following the funding round.

The Series A round was led by Vulcan Capital, the investment arm of the late Paul Allen, with participation from Salesforce co-CEO Marc Benioff, Building Ventures, Jason Calacanis’ LAUNCH, Kapor Capital, Motley Fool Ventures, Ten Eighty Capital, and angel investor Dennis Joyce. The round brings Blokable to $28 million in lifetime funding.

Last year, Blokable delivered a model unit as part of a larger housing project in Edmonds, Wash., north of Seattle. Since then, Blokable hasn’t completed any additional projects, and has instead focused on nailing down the business model and making sure the manufacturing process meets housing regulations.

“We’re not rushing to get maximum output at this point,” Blokable Co-CEO Aaron Holm said in an interview with GeekWire. “It’s really about the engineering of the building system and getting that 100 percent ready for scale and then looking for opportunities to spread across the country.”

Holm is a former Amazon product manager who worked on the tech giant’s physical retail push, including bookstores and the checkout-free Amazon Go convenience concept. Nelson Del Rio advised the company for two years and joined Holm as co-CEO in late 2017. Del Rio pioneered public-private partnerships for handling government-occupied commercial buildings that brought together government entities, nonprofits and commercial developers.

Blokable Co-CEO Aaron Holm. (Blokable Photo)

Blokable envisions itself as a disruptor of the traditional housing development process. And it must be that, Holm says, because the housing market is fundamentally broken. It simply costs too much to build housing — both market-rate and affordable — and no economic dip or market correction will make enough of a difference.

“It’s out of control,” Holm said of housing costs. “The issue is not going to get any better, and it’s not going to change.”

For most of its history, the signature public-facing element of Blokable has been the Bloks, manufactured smart housing units that come together to build inexpensive but high-quality complexes. The company also offers “housing development as a service,” to speed up how quickly projects can be planned and built, thereby lowering costs and giving owners more control of the schedule. Blokable pitches the service as “turnkey” for non-profits, housing trusts, developers and others and handles the entire process with help from a network of architecture and contractor partners.

The company makes money in two different ways. For market-rate housing, Blokable owns the units and makes money off the equity they gain. For affordable housing, Blokable develops units for nonprofit partners for a fee in addition to the cost of the project.

Blokable employs 22 people today and is working on hiring a vice president of manufacturing. Blokable has refined its manufacturing and engineering process in the last year to be in compliance with stringent California regulations around housing as it looks to expand there.

The beginning of a Blok studio unit is lowered onto a site in Edmonds, Wash. in 2018 (Blokable Photo)

Modular housing — the trend of building units inside a controlled facility to avoid unpredictable on-site conditions — is not exactly new. In the Seattle area alone, there are a number of companies that build modular housing.

Nelson Del Rio. (Blokable Photo)

However, Blokable gets unfairly lumped in with other modular housing builders, argues Travis Connors, co-founder and general partner of Building Ventures, a real estate-focused venture capital firm that invested in Blokable’s latest round. While a number of companies have shifted parts of the traditional construction process inside, Blokable aims to shift the model for building housing by creating a streamlined manufacturing system that can be easily repeated to lower costs and time to build.

“What’s unique about Blokable is they have thought through an entire business model disruption to target a particular problem that is very acute and massive around high quality affordable housing,” Connors said.

The units are made of steel frames instead of the wood frames typically found in many modular projects. That makes it easier to quickly transport and install Bloks on site and arrange them into larger units or create multi-unit housing complexes.

Bloks can be stacked as high as three stories right now, and the company is working to improve the structures to the point where five-story buildings are possible by next year.

A rendering of the Edmonds project. (Blokable Photo)

The bones of Blokable units are standardized. Everything else — like doors, windows and fixtures — is customizable. Blokable says it wants each of its projects to fit in and raise the profile and prosperity of the neighborhoods it builds in.

Built into every unit is a smart monitoring system called BlokSense meant to reduce operating, maintenance and insurance costs by keeping tabs on air quality, humidity and alerting owners when something needs fixing.

Holm says the company has a backlog of potential projects in Washington and California, though he didn’t give many specifics. The Edmonds project is one of the furthest along, and Blokable is working with affordable housing company Compass Housing Alliance to build 64 units on land donated by Edmonds Lutheran Church. Blokable plans to break ground on a project in Auburn, Wash., a city southeast of Seattle and deliver the first few units in the fall.

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