Overcrowding in public schools is a widespread problem all over the country, particularly in California. Thus far, the solution has been to build portables to help accommodate the overflow of students.
Anyone who’s stepped foot in one of these portables can attest to the fact that they are not always the most comfortable or secure “buildings.”
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Vallejo, California-based iMod Structures, wants to take the concept of portable classrooms to another level by bringing modular, or prefabricated construction, to the public education sector. And it’s just raised an $11 million Series A led by the Goldman Sachs Urban Investment Group to help it achieve that goal in California. The financing, consisting of a mix of equity and warrants, marks the first institutional investment in the company.
As part of the financing, Sherry Wang, managing director in the Goldman Sachs Urban Investment Group, will join the iMod Structures board of directors. Laurence Pelosi, co-founder and principal at Forty Six North Advisors, also participated in the new round of funding as a new investor. He will also join the iMod board.
Founded in 2009, iMod Structures initially focused on disaster relief and workforce housing abroad with its first modular projects going up in Guam, Haiti, and Chile as part of a partnership with shipping giant Maersk. In 2016, the company pivoted to the domestic market and produced a prototype of its first modular classroom.
In general, the prefab sector is gaining momentum. Over the past few months alone, I’ve written about N.C.-based Prescient, which specializes in prefab multifamily and student housing construction, raising $50 million and another, Dvele, which is focused on prefab single-family homes, raising $14 million.
iMod believes its core differentiator from other modular construction companies is that when it delivers its classrooms, they are 98 percent completed.
“We don’t want to be in the business of site build,” said John Diserens, co-founder and chairman of iMod Structures. “When we deliver buildings, they are finished and ready to be connected to utilities.”
Margaret Anadu, partner & managing director of the Goldman Sachs Urban Investment Group, told Crunchbase News that her group invests in initiatives that are focused on underserved populations.
“So many young students are sitting in these portables, the majority of which exist well past their intended use time,” she said. “With iMod, we saw a great opportunity to put them in beautiful, comfortable and technologically-advanced classrooms.”
Goldman was also drawn to the fact that iMod is able to outfit its classrooms for $250 to $300 a square foot. (Each classroom is about 960 square feet and hold 26-32 students.)
“iMod’s ability to provide these at a price point inside of what’s out there today was very compelling,” Anadu told Crunchbase News. “So students are provided with much higher quality environments at a cost that’s going to save money for the California public sector.”
In addition, the durability of a steel frame (it weighs 24 tons) should translate into savings with less ongoing maintenance over time, the company believes. The classrooms’ features also include HVAC systems that evenly distributes heat or cool air quietly and reflective glass for windows and doors. Softer lighting and the ability to lock the doors from a central location are also an option.
“We’ll be building highly insulated, safe buildings with energy management programs that can be installed over a weekend without disrupting operations of a school,” Diserens said. “They are sustainable and reusable unlike the current wood-frame bungalows, which have no value after 10 to 15 years.”
The company is initially focused on the California market and expects it will be “a long time before there is a need to look outside of it” due to its sheer size, Diserens told Crunchbase News. A September 2018 report conducted by PACE (Policy Analysis for California Education found that, “[a]ccording to a recent estimate, California school districts need to spend between $3.1 billion and $4.1 billion annually just to maintain their existing facilities. Further, the total amount of facility funding needed for California schools during the next decade for modernization and new construction is expected to be about $117 billion.”
iMod is also looking beyond the public school system, with plans to pursue opportunities within the State of California’s university systems.
Kathleen Brown, government and regulatory partner with Manatt, Phelps & Phillips LLP, former California State Treasurer, and Los Angeles Unified School District board member, served as an advisor to Goldman Sachs on the financing.
“California educates more students than any other state in the country, and innovative solutions coming from companies like iMod Structures play a key role in addressing the pressure our school facilities often face,” she said in a written statement.
iMod expects to commence commercial-scale production of its modular classrooms later this year. For now, iMod is in the production process for its first five classrooms and is negotiating its first phase of contract awards, which should be announced in the next couple of weeks.
The company is also planning to use its new capital to build out its customer engagement and deployment team. iMod currently has 20 employees between its office and factory but plans to employ between 50 and 75 people in its factory and between 20 and 30 in its office “at full production,” according to Diserens.
Images courtesy of iMod