UpEquity, a Digital Mortgage Startup That Makes All Cash Deals, Secures $ 50 Million in Debt and Equity – TechCrunch
UpEquity, a digital mortgage company that makes cash offers on behalf of a buyer, today announced it has raised $ 20 million in equity and secured $ 30 in debt financing.
S3 Ventures led the fundraising, bringing the startup’s total funding since its inception in 2019 to $ 77 million, including $ 29.15 million in equity. Next Coast Ventures, BP Capital Management, Alumni Ventures, Gaingels, Launchpad Capital and Early Light Ventures also put money into the round.
There are many digital lenders out there (Better.com being one of the best known). And there are also many companies that will be making cash offers on behalf of buyers. But there aren’t many that do both. (We vsexceeded to augment from another such startup, Accept.inc, in June).
In an interview with TechCrunch, UpEquity co-founder and CEO Tim Herman said the company has seen 500% year-over-year growth in revenue and volume from transactions. He expects him to produce over $ 1 billion in mortgages over the next 12 months. UpEquity has so far worked with “thousands” of buyers.
The start-up promises faster closing times, thanks to its mortgage underwriting technology – claiming it cuts industry-standard closings from around 50 days to 18 days, Herman said. His goal over the next year is to reduce that figure to an average close of 10 days.
The company also claims to offer lower interest rates than other companies in what it describes as the “power buying” space at no additional cost. UpEquity, he said, can also turn customers into cash buyers so they don’t risk losing their home of choice in a competitive situation.
“For the first time in history, single-family homes are an institutional asset class,” Herman told TechCrunch. “You have Blackstone and other private equity firms or sovereign wealth funds buying entire neighborhoods with all-cash offers. And so, in this environment with limited supply and increased demand, the average American is left out of access to single-family housing, and that’s what we’re here to help solve.
Herman met co-founder Louis Wilson while they were both at Harvard Business School. They launched the company in the spring of 2019 and competed in the Y Combinator Summer Lot that year. UpEquity officially made Austin its home base in 2020. Since then, its team has grown from around 15 to 90 people.
“Yes you can automate taking out a mortgage, there are three things you can do. You can take the cost off the mortgage, and you can speed up and add certainty to that mortgage, ”Herman said. “And we take that speed and that certainty, and use it to create an all-cash offer for our borrowers that we can give them for free.”
Like other lenders, UpEquity makes its income on a portion of the interest that a buyer pays over the life of the loan. Not all of its customers benefit from the company’s ability to offer an all-cash offering, but the “vast majority” do, according to Herman.
Overall, Herman said, the mortgage industry claimed they were going to have a digital mortgage, but “all they did was put a sleek user interface on the front end and d ‘invest money in marketing’.
“But if you look under the hood, it looks like the technology from 1985,” he added. “And so what we think really sets us apart is that we are the only company that has focused our technology on the back end of producing a mortgage. As such, Herman said, UpEquity’s real competition is not other startups, but the legacy mortgage industry “which has failed to innovate and results in such a poor user experience for them. consumers around the world ”.
UpEquity is licensed in Texas, Colorado, Florida, Illinois, and Georgia. It plans to expand state by state.
Charlie Plauche, partner of S3 Ventures, who sits on the board of directors in connection with the financing, believes the company is solving a “very real and growing problem” in the mortgage industry.
“Large institutional investors are buying homes at an all-time high and winning deals by making all-cash offers and promising quick closing times,” he wrote via email. “The average consumer will need to be able to make similar offers to buy their dream home and UpEquity allows them to do so with its accelerated closing times and all-cash offers. ”
Plauche also believes that the company’s ability to make cash offers to buyers at no additional cost helps to differentiate it.
“Other mortgage companies charge up to 2% on the mortgage for a cash offer option,” he said.