Home Financing, Disrupted

Venture capital firms are strengthening their position in the housing industry.

For many American homeowners and aspiring homebuyers, financial obstacles such as student loan or credit card debt make saving up a down payment or qualifying for a home loan extremely difficult. Financial technology, or fintech, platforms are proliferating, offering greater borrower flexibility than more traditional financing options.

Venture capital firm Andreessen Horowitz’s motto is “Software is eating the world,” and the company now has two housing-centered fintech platforms in its portfolio.

The first of these is Point. Launched in 2015, Point claims to be the first platform created for homeowners to leverage the equity “locked” in their homes into cash flow for paying down debt or diversifying assets without having to take on new debt. Data services company CoreLogic recently concluded that U.S. homeowner equity topped $1 trillion in the first quarter of 2018.

Eddie Lim, Point cofounder and CEO, says the program’s mission is to “fundamentally align homeowners with investors.” In its first year, Point was named to Forbes’ list of top private fintech platforms on the market. This April, investment firm Atalaya Capital Management committed $150 million to expand the platform to more U.S. markets.

“Atalaya was impressed with Point’s track record in developing this emerging asset class,” says Atalaya partner Raymond Chan.

The other housing-centered fintech platform newly under the VC’s umbrella is FlyHomes, which aligns investors with homebuyers, making cash offers on the qualifying borrowers’ behalf to “increase certainty” for buyers in a seller’s market.

Andreessen Horowitz general partner Alex Rampell explains, “We are always on the lookout for businesses [providing] better service at a lower cost than traditional models. The real estate industry is at a critical inflection point, we see FlyHomes’ vertical approach … as a dramatic improvement to the purchase experience for homebuyers, sellers, and agents.”