- Patch Homes, a modern finance company that helps homeowners tap into their home equity without selling their home, announced it raised $5 million
Patch Homes — a modern finance company that helps homeowners tap into their home equity without selling their home or taking on additional debt through its innovative home equity sharing product — announced it raised $5 million in Series A funding led by Union Square Ventures with participation by new investors Tribe Capital and existing investors Techstars Ventures, Breega Capital, and Greg Schroy.
This round of funding allows Patch Homes to build on its rapid growth and scale up its team to meet rising consumer demand for a home finance product without monthly payments or interest. And in under two years since launching its Home Equity Sharing product in California, Patch has underwritten homes collectively worth more than $3.5 billion, expanded into 11 metro areas across the United States, and grown origination 20x year-over-year in 2019.
“We know that homeownership is a journey that doesn’t end when you buy a home. Patch was created to partner with homeowners to help them unlock their home equity so they can achieve their financial goals along every step of their homeownership journey,” said Patch co-founder Sahil Gupta. “This funding will allow us to rapidly grow our team and continue our expansion, so that we can partner with even more homeowners.”
Patch Homes was founded in 2016 by Gupta and Sundeep Ambati. The company is based in San Francisco and has an office in New York City.
Unlike a traditional debt product (a HELOC or a Home Equity loan), Patch’s partnership approach allows homeowners to access as much as $250,000 of their home equity without the burden of monthly payments or interest. And through its equity sharing model, Patch is helping fill the huge void created by banks and other lenders who take an increasingly narrow view of who qualifies for home equity loans or HELOCs. Patch utilizes machine learning techniques to analyze thousands of data points on the asset, the market, and the owner to take a more holistic view of the homes they want to invest in.
“Patch’s founders are taking a customer-centric approach to providing a new and important financing option for homeowners,” added Union Square Ventures Partner John Buttrick. “Patch approaches their customers as equity partners – not as debt contractors – resulting in aligned incentives and incredibly positive customer feedback to-date. Our team at USV feels fortunate to be joining Patch on their journey, and we look forward to supporting their expansion efforts into new markets.”
A major factor in Patch’s growth over the past year has been an equity partner with a long term alignment with Patch and its homeowner partners. And Patch Capital Partners (PCP) — a Chicago-based real estate private equity firm founded by former Guggenheim Partners Managing Director Adam Hitchcock and Coolhouse Labs founder Jordan Breighner — is the exclusive home financing partner of Patch Homes and is intending to invest an initial $100 million in capital in Patch contracts.
“From our early interactions with Sahil and the Patch Homes team it was clear they were taking a different approach to helping homeowners by aligning interests for all parties,” explained Tribe Capital Co-Founder and Partner Ted Maidenberg. “Your home is the majority of net worth for Americans yet liquidity options are rooted in debt products; Patch financings break that mold and the team has built sophisticated data-driven underwriting and monitoring platform to enable rapid growth of this new product. We are thrilled to partner with the team and look forward to supporting them in the future.”
