Ex-Zillow execs launch digital mortgage startup with $40M seed round

Called Tomo, backers include Trulia co-founder Pete Flint and Spencer Rascoff

Tomo's Greg Schwartz and Carey Armstrong (Photos via Tomo Network)
Tomo's Greg Schwartz and Carey Armstrong (Photos via Tomo Network)

In Silicon Valley, the typical seed round for a new venture is around $1 million — maybe $3 million. But a new digital mortgage company, started by two former Zillow execs, has just launched with $40 million.

Tomo, which bills itself as a fintech startup, announced the eye-watering seed round Wednesday. Trulia co-founder Pete Flint and former Zillow CEO Spencer Rascoff are among the investors.

Based in Stamford, Conn., with offices in Seattle and Austin, Tomo is the brainchild of Greg Schwartz and Carey Armstrong. Schwartz worked at Zillow for 13 years, most recently as president of media and marketplace; Armstrong was vice president of its Premier Agent business, which generates nearly $1 billion in agent advertising a year.

Although Tomo provided few details about its specific business model, the company said it aims to streamline the mortgage and home-buying process for buyers and agents. “We’re going to move from a document management approach to a data management approach,” Schwartz told Geekwire.

In a statement, he said: “Buying a home is a lousy experience. Despite years of tech companies focusing on real estate, the overall process has not changed.”

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Tomo’s initial funding was led by Ribbit Capital, Zigg Capital and NFX, a firm co-founded by Flint, who sold Trulia to Zillow for $2.5 billion.

Other investors include SVB Capital, an affiliate of Silicon Valley Bank, and investors Ted Ackerley, Alex Sacerdote, Kurt Mobley, Eli Weinberg. Rascoff, who just launched a second-home startup called Pacaso, also invested. (Side note: Schwartz backed Pacaso.)

The majority of seed rounds for startups are still less than $1 million, but their size is growing. Last year, the median seed round size was $3.9 million, up from $3.1 million in 2018, according to Wing Venture Capital, a Palo Alto, California-based firm focused on early-stage companies. The median, pre-money valuation for seed financings was $11 million in 2019, up 17 percent from $9.4 million a year prior.

Real estate tech startups — including mortgage and title — have been the beneficiary of increased investor appetite.

In May, San Francisco-based States Title raised $123 million to accelerate its digital mortgage, title and escrow offering. Investors Greenspring Associates, Foundation Capital and FifthWall Ventures valued the company at $623 million. Separately, mortgage lending startup LoanSnap snagged a $10 million investment this spring from Alex Pall and Drew Taggart, the DJ duo behind the Chainsmokers. Notarize, a digital notary startup, raised $35 million in July.