- Venture funds have invested $24.6 billion into proptech through the third quarter, meaning 2019 is already a record funding year for the space.
- CB Insights devoted a section of a recent fintech report on a surge of funding for startups focused on homebuying and homeowning.
- The report separates these companies into two groups: companies that have developed ways to free up home equity and those that have developed products that facilitate home ownership.
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Venture funds poured $24.6 billion into real estate tech startups through the third quarter, pushing 2019 to a record funding year for the space. Startups looking to cash in by offering home equity and other products are a particularly hot niche of the broader proptech industry.
A chunk of that funding has been for financial real estate startups that straddle the line between fintech and proptech, a relationship that MetaProp cofounders write about in their recent book.
There are many startups that are attempting to disrupt how consumers buy homes, most famously iBuyers like SoftBank-backed Opendoor that can purchase homes in as little as 24 hours, and brokerages like SoftBank-backed Compass.
CB Insights focused a section of a recent fintech report on startups focused on financing specific parts of the homebuying and homeowning process. The report separates these companies into two groups: companies that have developed ways to free up home equity, and those that offer products to fractionalize homeownership.
The categories are somewhat nebulous, as almost all of the companies offer somewhat different approaches to similar end goals, but they show how startups are attempting to carve out a place in almost every part of the financial process of home ownership.
The home equity category compares companies across three different mechanisms: HELOCs (home equity lines of credit); equity sharing, reverse mortgages and refinance; and rent-to-own or lease-back programs.
The first two mechanisms are all variations on the second mortgage, which allow a homeowner to borrow money against the value of their house. The third category allows potential homeowners to put their rent towards equity in a home, or allows them to sell their ownership.
The home ownership category only has four companies in it, and each is different enough that they can’t be compared across different categories.
We break out each company below. A majority of the information comes from the CB Insights report, and we’ve supplemented the data with background on the companies.