Porch.com to go public in $523M blank-check deal

Home-service startup is projecting $120M in revenue in 2021

Porch CEO Matt Ehrlichman, with Abu Dhabi Investment Authority veterans Thomas Hennessey (inset left) and Joseph Beck (inset right) (Ehrlichman via Porch,  Hennessey and Beck via LinkedIn)
Porch CEO Matt Ehrlichman, with Abu Dhabi Investment Authority veterans Thomas Hennessey (inset left) and Joseph Beck (inset right) (Ehrlichman via Porch,  Hennessey and Beck via LinkedIn)

Porch.com, a VC-backed home services marketplace, is going public with a blank-check company, one of the first such deals in the proptech world.

The Seattle-based firm said Friday it entered a definitive agreement to merge with PropTech Acquisition Corp., a Los Angeles-based special acquisition company, or SPAC, formed last year by Abu Dhabi Investment Authority veterans Thomas Hennessey and Joseph Beck. The deal values Porch.com at $523 million.

Upon closing, PropTech will be renamed Porch and will trade under the ticker symbol “PRCH.” Wellington Management is also investing $150 million as part of the deal, which is expected to close in the fourth quarter.

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Founded in 2013, Porch provides software to insurance and moving companies in exchange for access to home-buyer clients. It then sells additional home services, such as contractor services and TV and internet, to those clients.
Porch claims that 5,500 home-inspection companies currently use its software, and because inspectors interact with homeowners prior to move-in, Porch gains early access to them.

“Merging with PropTech and becoming a public company is the right next step in our growth phase and a key milestone for our company,” CEO Matt Ehrlichman said in a statement. “A public listing will enhance our ability to scale more quickly and continue to innovate.”

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To date, Porch has raised nearly $120 million from investors including Valor Equity Partners, Lowe’s Cos., Founders Fund and Battery Ventures.
Porch shareholders will get $30 million when the deal closes. Its executive team — including Ehrlichman, who will remain CEO — is rolling 92 percent of their equity into the deal, the company said.

According to an investor presentation, Porch’s revenue has been growing at a 50 percent clip but, like other fast-growing startups, it is not yet profitable.
Porch generated $57 million in 2019 revenue, company financials show, up from $36 million in 2018. It is projecting revenue of $73 million in 2020 and $120 million in 2021.

But Porch lost $50 million in 2018 and $56 million in 2019, the company disclosed Friday. Those losses are expected to narrow to $34 million in 2020 and $11 million in 2021.

PropTech was formed last year as a SPAC, raising $172.5 million in November 2019, with the goal of merging with a proptech startup and taking it to the public market. During an investor call Friday, Henessey said the SPAC evaluated 300 companies over the past six months.
Mergers with SPAC have gained popularity in recent months as a hedge against a turbulent equity market.

Earlier this year, VTS was reportedly approached by a SPAC, according to the Wall Street Journal. Just last week, Airbnb was, too, after CEO Brian Chesky revived IPO plans that were upended by coronavirus.

So far this year, 48 SPACs have raised $17.1 billion, representing 40 percent of money raised in the IPO market, according to IPO tracker Renaissance Capital. Bill Ackman’s blank-check company, Pershing Square Tontine Holdings, raised $4 billion, the largest SPAC to date. It is reportedly looking to take a “mature unicorn” public.

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