Point, a financial technology platform that offers homeowners the opportunity take equity out of their home without taking on new debt, is set to grow thanks to a $150 million commitment from Atalaya Capital Management, a private investment firm.
Under the agreement, Atalaya and Point entered into a forward flow purchase program wherein the investment firm is committing to buy as much as $150 million of Point’s shared equity instruments.
Point is a shared equity provider. Here’s how it works: Homeowners sell Point a fractional interest in their properties in exchange for a tax-deferred lump sum that they do not have to pay back in monthly installments. The money is also interest-free.
According to Point, most homeowners use the money to “diversify their wealth, invest in their businesses, renovate their homes, or pay off debts.”
Point says that it makes money on the home’s price appreciation when the homeowner decides to sell. Within 10 years, the homeowner exits the agreement by either selling their home or buying out Point’s interest in the home
Now, Atalaya is pledging to buy as much as $150 million in the shared equity from Point.
Eddie Lim, Point’s co-founder and chief executive officer, said that the commitment will allow Point to grow its platform significantly.
“We’re thrilled with our progress at Point this past year, proving out the platform and bolstering a housing finance product that fundamentally aligns homeowners with investors,” Lim said.
“The partnership with Atalaya allows us to bring our product to many more homeowners and otherwise enhances our operating platform,” Lim continued. “With Atalaya's investment, we will continue improving our marketing infrastructure, underwriting automation, data assets and other tools to continue to drive value for homeowners and investors in the structured home equity arena.”
Currently, Point invests in homes in California, Washington, Oregon, Massachusetts and Colorado, and plans to expand to additional markets throughout 2018.
The company began originating its home equity investments in 2015 and is backed by Andreessen Horowitz, Ribbit Capital, Bloomberg Beta, and others.
“Atalaya was impressed with Point's track record developing this emerging asset class, one that strongly correlates with our existing investment strategies,” said Raymond Chan, partner, Atalaya Capital Management.
“Atalaya is extremely impressed with Point's management team and existing financial sponsors. We are excited to join Point and help them continue bringing their innovative and valuable consumer financing solutions to a very large addressable market,” Chan added.
“Atalaya has significant experience investing and scaling with partners within both the real estate and specialty finance verticals, and we believe that our capital and collaboration will help Point successfully execute on its business plan,” Chan concluded.