Stoa USA Inc., a Phoenix company that makes an ibuyer platform for home flippers called FlipOS, has raised $136 million in series B financing to grow the company and expand into new markets.
The funding came in two parts; $36 million came as an equity investment from Zeev Ventures, a California-based venture capital firm. Zeev previously invested in HomeLight, another Valley proptech startup. The remaining $100 million came from a securitization deal led by Cantor Fitzgerald, a financial services company.
Stoa was founded in 2018 and its primary product is FlipOS, an online platform that helps real estate investors and home flippers quickly sell their renovated properties.
Or Agassi, the CEO of Stoa, said the FlipOS platform helps remove some uncertainty from the home-flipping process.
“Fix-and-flip investors are like the neglected child of the real estate industry,” he said. “They are creating such amazing houses and they're always in a chase. They are chasing funding, they're chasing vendors, chasing buyers, and we realize that technology can really streamline all of these processes.”
Traditionally home flippers buy a house, renovate it and then work on finding a new buyer, hoping to sell the property for a profit. By working with FlipOS, these investors know they have a buyer before they start the renovation process.
Interested home flippers come to FlipOS with a property they’d like to renovate, FlipOS analyzes the property and makes the flipper an offer to buy the house once it's ready to be rented out or sold. FlipOS also generates a scope of work so the renovators know exactly what fixes to make before selling to FlipOS.
The FlipOS platform, Agassi said, helps renovators cycle through the flipping process quicker than before by taking the sale process off their plate. Also, by securing a buyer early, flippers can work on narrower-margin flips confidently because they already know what sale price to expect.
“The fun thing about it is that by empowering them, we're creating more inventory for ourselves,” Agassi said. “So everybody wins.”
Finding a market fit
Agassi co-founded Stoa with Tom Sella, who currently serves as the company’s president. Sella and Agassi are childhood friends who grew up together in Israel but found their way to the U.S. in recent years.
Stoa and FlipOS currently employ 51 people, most of whom are in Arizona. Agassi said they plan to have at least 100 people on staff by the end of Q1 2022 and more than 300 by the end of Q1 2023.
Agassi said they first opened up the platform to home flippers back in February, and the past several months have been about proving the model, building relationships with renovators on the ground and laying the foundation for further growth. FlipOS has secured more than $20 million in revenue since the platform launched earlier this year.
FlipOS is currently available to home flippers in Arizona’s Maricopa, Pinal and Pima counties, as well as in counties across Florida and Texas. Agassi said they will soon open operations in North Carolina, South Carolina and Georgia.
The ibuyer model was popularized thanks to companies like Opendoor, RedFin and Offerpad. Seattle-based Zillow made headlines recently after announcing the shutdown of its ibuyer division earlier this month, a move that forced the company to cancel hundreds of contracts with sellers across the country.
Although FlipOS bills itself as an ibuyer, Agassi said the company does not compete directly with these more established companies. In fact, he said FlipOS is working on collaborations with some of these companies since they could buy the newly flipped homes.
“We are, to some extent, the conduit,” he said. “We work with the investor in order to create these standardized properties, what we call good homes, and they [other ibuyers] can absolutely be a potential buyer for these good homes.”
Agassi said he wasn’t aware of other direct competitors doing similar business-to-business ibuyer work, but he expects others will crop up as FlipOS spreads across the country.
