Homeward, a startup that helps consumers make cash offers on houses, announced today that it has raised $371 million in new funding.
The new funding is split between $136 million in equity and $235 million in debt, according to a company statement. The statement adds that Homeward will use the new funding to expand the scale of its core business, which involves making cash offers on behalf of consumers.
“We anticipated cash offers becoming standard a few years ago,” company founder and CEO Tim Heyl said in the statement. “We designed our cash offer in a way that enables agents to make every buyer a cash buyer. Our instincts were right — that’s obvious from the tremendous demand we’re seeing today.”
A number of venture capital firms contributed to the equity part of the funding, including Norwest Venture Partners, Blackstone, Breyer Capital, Adams Street, Javelin, and LiveOak Venture Partners.
Heyl leads the high-producing Heyl Group, a Keller Williams team in the Austin, Texas, area. He founded Homeward in 2018, and the company has since gone on to have multiple successful fundraising rounds. In 2019, for example, the company secured $25 million in debt and equity. In 2020, it raised $20 million in equity along with $85 million in debt.
This latest haul, however, blows those previous funding rounds out of the water. It also comes at an opportune time for the company.
As the coronavirus pandemic begins to wind down and the spring buying season heats up, housing inventory across the country has plummeted. The result has been a highly competitive buying landscape dominated by cash offers — which is exactly what Homeward specializes in.
Homeward specifically works by purchasing a home on behalf of a buyer. The idea is that this approach allows buyers to move more quickly and be more competitive. Buyers then lease back the new house from Homeward while they work to sell their previous property.
Once the old house sells, the buyer gets a mortgage and purchases the new home from Homeward. The company’s fees vary by location, and consumers can also get a credit for using Homeward Mortgage — which the company says can bring the effective fee to 0 percent in some cases.
Homeward also touts its focus on working with real estate agents. In Thursday’s statement, the company explained that it partners with agents, helping them “stand out from the crowd” with a cash offer and “protecting their earned commissions.”
“Most alternatives to traditional real estate minimize or replace the agent,” Heyl said in the statement. “But we are agents ourselves, and we’ve built this for agents. We believe today’s seller’s market makes agents more important than ever.”
That pitch has apparently been compelling to investors. In the statement, Jeff Crowe, a managing partner at Norwest — which has invested in Opendoor, home design platform Modsy, and co-living company Common, among many others — described Homeward as an innovative company “at the intersection of real estate and fintech — that’s the next frontier.”
“Homeward’s cash offer addresses real problems for homebuyers in all market conditions,” Crowe added, “and the team has identified a winning strategy by partnering with agents and their clients.”
Correction: This post originally misstated the Homeward’s fee structure.