UpEquity raises $50M, hopes to originate $1B in next year

"Power buyer" enables homebuyers to make all-cash offers to compete with institutional investors

Austin-based mortgage tech platform UpEquity raised $50 million in a Series B funding round led by the venture capital firm S3 Ventures. The funding will support the company’s growth as UpEquity forecasts more than $1 billion in originations over the next 12 months.

The funding consists of $20 million in equity and $30 million in debt, UpEquity said in a statement. Other investors included Next Coast Ventures, BP Capital Management, Alumni Ventures, Gaingels, Launchpad Capital, and Early Light Ventures.

Co-founded by Tim Herman and Louis Wilson, the “power buyer” startup enables homebuyers to make all-cash offers to compete with institutional investors. Then, the company receives monthly payments with interest from the homebuyers, who can avoid going through a bank to get a mortgage.

The company earns a commission from brokering or selling the mortgage that buyers take out to buy their home. In states where purchase contracts can’t be assigned, UpEquity buys the home upfront and writes the mortgage after the deal is closed.

S3 Ventures partner Charlie Plauche, who will have a seat at UpEquity’s board, said institutional investors deployed $77 billion in six months into single-family homes as an asset class, with no signs of slowing down.

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“Your average homebuyer is now regularly competing against massive companies that can offer very attractive terms to sellers such as all-cash offers and fast close times,” said Plauche in a statement.

UpEquity has raised a total of $77 million to date. In February, the Series A funding round raised $25 million ($7.5 million in equity and $17.5 million in debt) to invest in product development and reduce the time-to-close to 10 days.

The company claims it takes 18 days, on average, to close a deal, while the average in the industry is closer to 50 days. Also, UpEquity says it helps homebuyers make an all-cash offer that’s four times more likely to be accepted than traditional mortgages.

The company said it has seen year-over-year revenue growth of 500%. “We’re giving our customers more choices than the legacy mortgage industry,” Herman said in a statement. “We’re able to do so without sacrificing essentials like competitive mortgage rates and while providing an exceptional customer experience.”

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