Real estate startup Patch Homes has announced a $5 million Series A funding round, led by Union Square Ventures and investors Tribe Capital, Techstars Ventures, Breega Capital and Greg Schroy.
Patch officially launched last year and offers homeowners cash in exchange for a share of the future appreciation on their house.
Founded in 2016 by Sahil Gupta and Sundeep Ambati, the California-based company allows homeowners to access as much as $250,000 of their home equity without monthly payments or interest.
The company said the capital raise will allow it to build on its rapid growth and meet its rising customer demand.
“From our early interactions with Sahil and the Patch Homes team it was clear they were taking a different approach to helping homeowners by aligning interests for all parties,” said Tribe Capital co-founder and partner Ted Maidenberg. “Your home is the majority of net worth for Americans yet liquidity options are rooted in debt products; Patch financings break that mold and the team has built sophisticated data driven underwriting and monitoring platform to enable rapid growth of this new product. We are thrilled to partner with the team and look forward to supporting them in the future.”
With Patch, homeowners have the opportunity to share their future home price appreciation in exchange for cash, between 10% and 15% of their home's value. Homeowners can pay back their investment within 10 years without any interest or monthly payments in the interim.
Since its launching its Home Equity Sharing Project in California two years ago, Patch has collectively underwritten homes worth more than $3.5 billion and expanded into 11 metros across the United States.
“We know that homeownership is a journey that doesn’t end when you buy a home. Patch was created to partner with homeowners to help them unlock their home equity so they can achieve their financial goals along every step of their homeownership journey,” said Patch Co-Founder Sahil Gupta. “This funding will allow us to rapidly grow our team and continue our expansion, so that we can partner with even more homeowners.