Startup that offers alternative to home equity lending raises $122M

A startup that buys equity in homes and then offers to sell it back to residents has raised $122 million.

Point, a Palo Alto-based firm, said Wednesday it raised $22 million in a Series B funding round led by Prudential Financial and DAG Ventures, according to Inman. Previous investors Bloomberg Beta, Ribbit Capital and Andreessen Horowitz also joined the round. The firm received a further $100 million investment from Las Vegas-based Kingsbridge Wealth Management to invest in homes.

The startup’s business model centers on offering an alternative to traditional home equity lines of credit, and offers to pay for a share of the appreciation the home would receive. To meet the criteria, the home must be in an area where it is likely to appreciate, the homeowner must hold up to 30 percent equity in the property and have good credit, among other factors. Providing the requirements are met, Point sends a third-party appraiser to value the property and then gives the homeowner a lump sum, while taking a handful of fees.

The homeowner can choose to buy back Point’s share in the property within 10 years, or if it is sold, the startup will receive 20 percent of the home’s appreciation.

Investor confidence in the startup comes at a time when homeowners across the country are choosing to hold onto their home equity, as interest rates rise. A report in July found that Americans have almost $6 trillion in equity, close to double the level in 2011.

“2019 is proving to be a year of exponential growth for the company,” the startup’s chief executive, Eddie Lim, said in an interview with Venture Beat. “We expect that growth to continue as home equity investments open up critical liquidity for a lot more homeowners.”

The firm, which launched in January 2015, is currently operating in 14 states, including New York, California, Illinois and Florida. It said the new funding will allow it to double in size to 30 states. [Inman, Venture Beat] — David Jeans