Charlotte real estate startup Ribbon has raised a $150 million funding round that its founders say will be used to quadruple its stateside presence by the end of next year.
Founded in 2017 by Shaival Shah and Wei Gan, Ribbon's platform allows the average homebuyer to compete on a level playing field with high-net-worth individuals and institutional buyers by upgrading their offers with cash that's backed by the startup.
The company announced earlier this week a $75 million equity round, alongside an additional $75 million in working capital. The round was led by Greenspring Associates, with participation from various existing and new investors. Ribbon has raised a total of $650 million in capital since 2017.
The funds, Gan said, will be used to expand the startup's footprint to reach at least 25 states by the end of 2022. Currently, Ribbon services North and South Carolina, Georgia, Florida, Texas and Tennessee.
"There are plenty of families in the rest of the United States who can benefit from what we do to win the home they love," he said. "So, a lot of what this Series C capital is going toward is aggressive expansion to be in half of the states by the end of 2022."
Gan said sellers tend to gravitate toward cash offers that are often made by institutional buyers and wealthy market investors, leaving homebuyers who need a mortgage with less of a chance.
"The problem we saw at founding was the challenging of institutional buyers and wealthy investors buying up homes across the U.S., making homeownership increasingly out of reach for the everyday consumer," he said. "What we want to do is empower the everyday buyer to compete on a level playing field."
To achieve this, Ribbon works in partnership with 20,000 real estate agents and brokers and more than 100 lending partners across its platform. Gan said in Charlotte, they work closely with Allen Tate and Remax.
"Ribbon is empowering, instead of disrupting, the existing real estate ecosystem of agents, brokerages, lenders and loan officers," he said. "That’s kind of key to us."
To use Ribbon, homebuyers obtain a mortgage pre-approval that their agent then takes to Ribbon to be turned into a cash offer, which is backed by the company's capital.
"We approve them with a cash offer within hours, and then they can go and make an offer that’s four times more likely to win than a regular offer," he said. "The agent, in turn, can draw up the offer from their mobile device or laptop in minutes instead of the usual hour it takes to write an offer on a home."
Gan added, "Because it’s a cash offer and backed by Ribbon and our capital, it’s much more likely to win."
