Factory-built, carbon-negative homebuilder Aro Homes has come out of stealth mode and announced it has raised $21 million in funding led by former Google CEO Eric Schmidt’s venture capital fund, Innovation Endeavors.
Aro’s factory is in Sacramento near McClellan Park. The company is based in Mountain View.
“The way we live has changed, but our homes — and the way we build them — haven’t kept up. The products being built today aren’t efficient,” said Aro Homes co-CEO Carl Gish, in a video call.
While most products evolve over time, most homes are still stick-built on site the same way they have been for decades, he said.
Gish said Aro plans to build homes that most people want, about 3,000 square feet with four bedrooms. The company plans to buy old housing stock in established neighborhoods and replace them with new, two-story homes. Aro Homes feature electric heat pumps and electric fireplaces, all electric appliances, LED lighting and solar panels paired with batteries that will provide more electricity than the houses use. They are prewired for electric car charging. They will be highly insulated to reduce heating and cooling costs.
The electric utility bills for the homes should be negative, Gish said. The homes are also designed to cut water use in half by integrating reuse and treatment of water that flows from showers and sinks for toilet flushing and landscape watering.
Aro Homes developed and owns the construction process end to end, fulfilling the roles of developer, architect, engineer, general contractor and real estate agent, Gish said.
The company uses machine learning and other technology to identify locations, which will typically be run-down older housing stock. Aro also uses algorithms and machine learning to achieve local zoning requirements as well as sustainability goals.
The company was founded in June 2021 to design and build ultra-efficient homes inside of a factory setting, which reduces waste by 40%. Aro plans to reduce completion time from 18 months for standard construction to 90 days using its platform, Gish said.
The Sacramento factory, once it gets dialed in next year, should be able to produce about 100 homes annually.
One of the ways it can compress the construction timeline is that it will lay foundations at the same time it's building the home in the factory. Aro will send modules to be stitched together on site. Another way it collapses the construction time is that many of its permits and inspections occur on the factory site, under state law, which sidesteps waiting for local inspections. The company plans to locate its first homes in existing neighborhoods in San Jose, Cupertino and Mountain View. They should sell for the going rate for homes in those neighborhoods, Gish said.
Aro is set up to run lean. It isn’t investing in robotics to build the homes, rather it is using construction professionals in the factory setting. The company has 30 employees now. It should place its first home next year, and then should start to generate revenue very quickly, Gish said, funding its further growth from operations.
Portola-based venture capital firm Western Technology Investment and Stanford University also participated in the funding with Innovation Endeavors. Some of Innovation Endeavors’ other early-stage investments include ride-hailing app Uber Technologies Inc. (NYSE: UBER) and fintech company and bank SoFi Technologies Inc. (Nasdaq: SOFI).
“Though housing has needed to be revolutionized for some time, few companies have met the challenge with the ambition and clarity of vision as the Aro team,” said Scott Brady, managing partner at Innovation Endeavors, in a news release. “Aro has unlocked a huge advantage by using a multidisciplinary approach and reimagining how homes are designed and built; they are raising the bar for what we should expect from a sustainability and design perspective.”
