Flyhomes, a real estate startup that funds cash purchases, announced Wednesday that it has raised $ 150 million in Series C funding, and the five-year-old deal at more than 800 million, according to sources familiar with the matter US dollar appreciates.
The Seattle-based company is benefiting from a pandemic-fueled property buying frenzy that has made cash a key strategy to win bidding wars in overheated markets like San Francisco and Seattle, and has increased its transaction volume by 115% since last March.
“We’re trying to create the best home buying experience in the world,” said Tushar Garg, CEO and co-founder of Flyhomes. “With this round of funding, we are really able to achieve that.”
According to Garg, Flyhomes has now worked with 2,400 customers initiating $ 2.6 billion in real estate purchases and sales, including $ 850 million brokerage transactions and $ 200 million mortgage transactions last year.
The funding round was led by Norwest Venture Partners and Battery Ventures and included investments from Fifth Wall, Zillow co-founder Spencer Rascoff, Andreessen Horowitz and Canvas Partners.
Through the company’s Cash Offers program, Flyhomes is buying a home on behalf of a buyer who pays rent to the company once they move in until they can secure funding for the buyback. If the buyer’s financing fails, Flyhomes guarantees that the startup will buy the house through an addendum to the buyer’s offer.
In 2019, Flyhomes launched its Trade Up program, which allows sellers to unlock equity from their current home in order to buy a new one. This option offers a guaranteed price on the buyer’s current home, which Flyhomes will then put up for sale and buy if it is not sold within 90 days. With Trade Up, buyers collect the difference when a home is sold above market, unlike traditional iBuyers platforms that keep it themselves.
The company receives half of the real estate commission that would normally go to the buyer’s broker, usually 2 to 3% of the purchase price; the guarantee is not charged extra.
Flyhomes is one of many proptech companies to see unprecedented growth in a pandemic-ridden year. The US housing market has emerged victorious, with low interest rates and a work from home reality that is driving many Americans to move to the suburbs. By the end of 2020, it had taken out 13.6 million mortgages worth $ 4.3 trillion, breaking all records. Other startups have benefited by entering the public market. Opendoor, an iBuyer for homes, went public in December last year. Blend Labs, whose white label software enables mortgages with some of America’s largest banks to be processed with just a few clicks, also confidential filed for an IPO in April.
Garg, an Indian immigrant and former Microsoft executive, envisions going public but is currently focused on expansion. While the pandemic initially forced Garg to restructure Flyhomes, take employees off and downsize, he said that rapid growth has enabled the company to bring back most of those employees. The startup almost doubled its workforce before the pandemic and currently employs around 400 people, he says.
With the new funding, Garg hopes to expand the platform to new locations. Currently, Flyhomes operates primarily out of the west coast markets, including Seattle, San Francisco, Los Angeles, San Diego and Portland, and Boston on the east coast.