One of the trickiest things homeowners face is the gap between selling their current home and buying a new one.
That's because many homeowners need the financial influx from selling their current property in order to get financing for the new one.
Austin startup Homeward is trying to solve that pain point by giving homebuyers the cash they need to buy the hew home and guaranteeing the sale of their current home.
And investors are interested.
The startup announced it has raised $20 million in new equity funding to grow its business -- and an additional $85 million in debt to help finance home transactions. The equity portion of the deal was led by Adams Street Partners, with additional funding from Javeline Venture Partners and LiveOak Venture Partners.
Founder and CEO Tim Heyl told Inno that Homeward has roughly 30 to 35 employees now, and it plans to hire 70-plus new employees in the next year to year and a half.
“The company has been growing like crazy," he said. "So not only do you have operations and sales and marketing hires, but we also have business operations and finance and product development.”
Heyl said Homeward started its new fundraising efforts near the end of January, and it continued narrowing its conversations down in March. Then, as was the case for many startups, the capital markets mostly froze up for a few weeks.
Despite the delay and some uncertainty, Heyl said Homeward was in a good position to close the round because the nation's housing inventory shortage is still generating a lot of demand.
Meanwhile, Homeward has an advantage in that people can move into a new home before showing their existing one -- something that could prove uncomfortable and even unsafe during the pandemic.
“They don’t typically want to be living in their home when strangers are coming in to tour it day in, day out," Heyl said.
Meanwhile, even in an economic downturn, there are signs home values will increase because of the lack of available, affordable housing in many parts of the country.
Heyl also said the startup is well-positioned because it offers a new and streamlined way of buying and selling homes -- and it's gearing up to continue growing and scaling its offerings in Colorado and Georgia.
“Homeward’s focus long term is redesigning the entire home buying and selling process," he said.
Homeward's model starts with consumers getting approved through an online application. Then, the homeowner can make an all-cash offer on a new home with Homeward's funds. Meanwhile, they rent their new home from Homeward and buy it back when they sell their existing home.
If the old home doesn't sell in six months, Homeward will purchase it at a pre-arranged market price.
As part of the new funding deal, which adds to the $25 million it raised last year, Jeffrey Diehl, managing partner at Adams Street, will join the Homeward board.
“We are a selective investor, particularly in the current environment, but Homeward stood out," he said in a news release. “The company is growing rapidly, has strong leaders with deep industry experience, and has impressive traction with agent partners.”
