SA国际传媒

, an Austin-based real estate startup that aims to help people buy homes faster, announced this morning that it has secured $105 million in funding.

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The 18-month-old startup raised $20 million in equity in a round led by that included participation from and existing backer聽. Homeward also closed on $85 million in debt financing from multiple unnamed institutional lenders.

The announcement comes just 10 months after the company raised $4 million in equity funding and $21 million in debt funding.

CEO founded Homeward in late 2018 after having worked in the industry for the previous decade, first as a broker then as the owner of a title company. During that time, he said he saw firsthand many of the problems in the industry. One conundrum he frequently ran into was people not wanting to make an offer on a home without knowing for sure their current house would sell in a certain amount of time.

To address that, a number of companies in the 鈥渋Buyer鈥� market such as and will buy homes, usually at a discounted rate, to give sellers the freedom to move on quickly. But Homeward is tackling the problem from another angle.

Homeward will make an all-cash offer on behalf of a customer wanting to buy a house. Meanwhile, that customer can hire an agent to list their home without feeling pressured to sell it in a certain amount of time or at a discounted price. Once Homeward buys a home, it will lease the property back to its customer until they sell their house,聽get a mortgage, and can buy the property back from Homeward. During the process, Homeward offers a predetermined guaranteed price for its customer鈥檚 home with the promise that if it鈥檚 unable to sell the house for at least that amount, it鈥檒l buy the house from them.

Heyl believes Homeward鈥檚 鈥渁lternative iBuyer鈥� model is a better deal for customers since it doesn鈥檛 purchase a customer鈥檚 old home for below market value.

鈥淲e allow them to make a cash offer on their new home, so they can move on their timeline and sell their existing home for its full value,鈥� he told SA国际传媒 News.

Heyl also said the downside of the traditional iBuyer model is that 鈥渃ustomers leave a ton of equity on the table.鈥�

鈥淚t鈥檚 similar to trading in your car,鈥� Heyl told SA国际传媒 News at the time of Homeward鈥檚 last raise. 鈥淲ith a car, leaving 5 (percent) to 10 percent on the table might be worth it for the convenience. However, losing tens of thousands of dollars of equity in a house is a bigger deal.鈥�

While Homeward鈥檚 model sounds similar to the one being operated by , which in 2019 raised a $400 million , Heyl said the difference is that Homeward 鈥渋s an open platform that agents can leverage with their customers rather than competing against agents as Knock does.鈥� For example, agents can register their clients on the Homeward site. As an agent himself, Heyl said he was tired of new players trying to cut agents out, so when forming Homeward, his goal was 鈥渢o overhaul the transaction process鈥� by partnering with agents.

Homeward gives homebuyers credit for their home equity upfront so they can make an all-cash offer on another home using the company鈥檚 funds. Buyers can then rent their new home from Homeward for up to six months while they finish selling their existing home. As mentioned above, as soon as their old home sells, they can buy their new one back from Homeward at the original price, plus a 2 percent to 3 percent convenience fee.

Heyl claims his company鈥檚 service pays for itself in the discounts it can bring and by making its offer more likely to be accepted.

Increased demand

Even during the COVID-19 pandemic, Heyl said that Homeward has continued to see 鈥渟trong customer and agent demand鈥� for its offering.

鈥淗ousing inventory is low right now, and customers are using our cash offer to beat out other bidders,鈥� he said.

Homeward has trained over 1,000 new agent partners via its webinars since the COVID-related quarantines went in place, according to Heyl.

Prior to the pandemic, Homeward saw its closed transactions surge by 10 times in the 12-month period ending in February.

Homeward is profitable on a per unit basis if you count transaction revenue minus costs to acquire and complete each transaction, according to Heyl. However, it is not yet profitable on a net income basis.

鈥淲e continue to keep variable costs and overhead reasonable while increasing our margins,鈥� he said.

Meanwhile, Homeward has 33 employees, up from fewer than 10 a year ago. The company will be 鈥済rowing the team significantly鈥� with the new financing, according to Heyl. It also will be able to purchase more homes for its customers and 鈥渆xpand its agent partnerships.鈥�

Currently, Homeward operates in Texas, Colorado and Georgia. Its ultimate goal is to open its offering to agents nationwide.

Investor POV

As part of the financing, Adams Street Ventures Managing Partner will be joining Homeward鈥檚 board.

In a statement, Diehl said his firm is being 鈥渧ery selective鈥� at the moment.

鈥淏ut Homeward stood out,鈥� he added. 鈥淭he company鈥檚 growth is impressive, the leaders have deep industry experience, and their traction with agent partners has been much better than expected.鈥�

Also participating in the round is , managing director of Javelin Venture Partners. A founder of Move.com (which was acquired by NewsCorp), Katz also has real estate industry experience.

“Homeward solves a major pain point for Realtors and their clients by making offers more competitive and home sales more certain,鈥� he said in a statement, adding that Homeward is 鈥渨ell positioned to scale in a way the industry and the capital markets will embrace.鈥�

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