Cash-offer fintech UpEquity scores $50 million in funding

Proptech mortgage company UpEquity, the digital platform providing home buyers with the means to put down all-cash offers, announced the closing of $50 million in Series B funding on Thursday.

Venture capital firm S3 Ventures led the round, consisting of $20 million in equity and $30 million in debt allocated. Additional partners included Next Coast Ventures, which led its previous funding round earlier this year, along with BP Capital Management, Alumni Ventures, Gaingels, Launchpad Capital and Early Light Ventures.

Austin-based UpEquity — part of a wave of real estate financing companies sometimes referred to as power buyers, who offer clients opportunities to pay for homes in cash and increase their likelihood of having a bid accepted — has raised $76.7 million since its founding in 2019, according to Crunchbase.

The share of homes paid for in cash increased noticeably over the past year, according to the National Association of Realtors. In September, cash sales accounted for 23% of purchases, compared to 18% one year earlier. The share was also up slightly from August’s 22%, but off from a high of 25% in April this year.

That percentage includes a rising number of investor buyers, which has made the market even more challenging for potential home buyers this year. According to Redfin, investors accounted for almost 16% of the purchase market in the second quarter this year, up from just over 10% a year ago.

“We are impressed with the company’s vision to enable all Americans to win their dream home, even when faced with stiff competition from institutional investors,” said S3 Ventures partner Charlie Plauche, who as part of the funding deal joins the UpEquity board.

The latest investment will be used to support UpEquity’s automated underwriting efforts, as it aims to shorten closings on cash-offer purchase to 10 days.

“At the end of the day, our vision is to create equal access to the American dream through frictionless, on-demand home buying, and it starts with bringing technology into the underwriting process,” said Tim Herman, UpEquity co-founder and CEO.

In addition to putting down cash offers on behalf of clients, UpEquity provides them with mortgage options. The company intends to utilize some of the funding to recruit new loan officers as it expands. Currently licensed in Texas, Colorado, Florida, Illinois and Georgia, UpEquity’s revenue growth came in 500% higher year over year, and the company plans to originate $1 billion in volume over the next 12 months.