Flyhomes raises $150M as it expands across U.S. and aims to change the way people buy homes – GeekWire
Editor’s note: The introduction to this story has been altered and this story has been updated. It did not meet GeekWire’s journalistic standards, and we regret the error.
Flyhomes, a Seattle-based startup founded in 2016, just landed a massive $150 million investment to expand its real estate model across the country. It’s one of the largest rounds raised this year by a Seattle-area tech company and follows a string of megadeals for startups such as Rec Room, Outreach, Highspot, Rad Power Bikes, Stackline, Tanium, Icertis, and others.
Flyhomes helps clients purchase houses directly with cash. The idea is to present its customers as the equivalent of cash buyers, which sweetens the deal for sellers and can give customers an edge — particularly in the current chaotic real estate market. Buyers secure a short-term loan from Flyhomes, which provides the cash until its clients finalize their mortgage.
The company’s integrated end-to-end service under one umbrella — Flyhomes offers mortgage services and also helps people sell their home — is a key differentiator to help fend off competition in the trillion-dollar real estate industry, said Flyhomes CEO Tushar Garg.
“We’re building the world’s best home-buying experience,” Garg told GeekWire this week. “That vision is coming closer to reality.”
Homebuyers and sellers have a flurry of options to pick from on their real estate journey, from traditional brokerages to new “iBuyer” services operated by online companies such as Opendoor and Offerpad.
There’s also Zillow Group, the Seattle-based industry giant that has been touting a similar message to Flyhomes over the past few years as it evolves from a media-focused search hub to being involved with the actual transaction, investing heavily in its iBuyer service Zillow Offers and growing its mortgage arm.
“Zillow’s first-quarter results exceeded expectations and showed our momentum toward delivering a seamless, end-to-end real estate transaction,” Zillow CEO Rich Barton said in May.
Spencer Rascoff, Zillow’s co-founder and former CEO, invested in Flyhomes as part of the latest round. He’s been tracking the startup for several years and said the growth has been impressive.
“Flyhomes is at the forefront of a group of innovators bringing consumer-first solutions to homebuying,” said Rascoff, who is leading a SPAC that is taking Offerpad public this year at a $3 billion valuation.
In some ways, Flyhomes is benefitting from an unusual market that has seen inventory sink 37% year-over-year, as its cash offers can help give buyers an advantage in bidding wars. Garg isn’t worried about how things might change when and if the market stabilizes. In a slower market, he said sellers may prefer all-cash offers even more so given the increased uncertainty of when they can sell.
“We are creating the best buying experience — it’s not for any one market situation,” added Garg, who co-founded Flyhomes with his former Microsoft colleague Stephen Lane.
Flyhomes has bought and sold more than $2.6 billion in home value since launching five years ago, and its transaction volume has more than tripled year-over-year. In addition to its cash offer and mortgage products, the company also offers a “Buy Before You Sell” program that helps sellers buy and move into their next home before selling their current property. The company makes money like a traditional brokerage, taking a piece of each transaction, and also earns revenue from its mortgage arm.
Flyhomes declined to provide revenue metrics.
It plans to use the fresh funding to expand in its current cities — Seattle, the Bay Area, Los Angeles, San Diego, Portland, and Boston — and launch in new ones. The company’s headcount tripled over the past year to 400 people, and that number is expected to double over the next 12 months.
Norwest Venture Partners and Battery Ventures co-led the Series C round. Fifth Wall, Camber Creek, Balyasny Asset Management, and existing investors Andreessen Horowitz and Canvas Partners also participated. Total equity funding is nearly $200 million. Flyhomes declined to provide an updated valuation. It was valued at $150 million following an August 2019 funding round, according to PitchBook.
Lisa Wu of Norwest Venture Partners and Roger Lee of Battery Ventures will join the Flyhomes board as a result of the funding.
“This market is massive and there will be lots of winners,” said Wu, whose firm invested in Opendoor. “But you have to start with the customer first in order to create the authenticity and consistency of the experience. Flyhomes stands out because they started with the customer first, and the vision has been very consistent.”