Linking strategy

Home Equity Financing Startup Point Raises $115M Series C

Eddie Lim, co-founder and CEO, Point (Getty Images, iStock)

Point, a fintech startup that pays homeowners cash in exchange for a share of their home’s equity, raised $115 million in Series C funding, it said Tuesday.

The Palo Alto-based company did not disclose a valuation figure with the funding round, which was led by WestCap and follows a $22 million Series B round in 2019. With the new raise, the funding The startup’s total stock is about $145 million, according to Crunchbase.

The funding comes after a period of rapid growth for Point, whose CEO Eddie Lim said its investments in real estate capital increased fivefold in the first quarter on an annual basis. Lim declined to provide actual numbers or information on the startup’s profitability.

Co-founded by Lim, Eoin Matthews and Alex Rampell in 2015, the startup isn’t the only one offering cash for home equity — an alternative to traditional home equity lines of credit — but she took a new approach to the business background.

Point is a self-proclaimed “asset-light” fintech; its operations focus on creating and servicing home equity investment agreements, or HEIs, for investors, including the startup’s own backers. Once there is a critical mass of ESEs, the company – with the help of investment bankers – aggregates them into a new security, which it markets to real estate investors and mortgage-backed securities.

The company claims to be the first to complete a fully SE-backed securitization, in a $146 million deal last September, underwritten by Nomura.

“Securitization is the point where we went from a junior university to a university,” Lim said. “There is liquidity and we can show that it is really institutional quality.”

Existing investors Andreessen Horowitz, Ribbit Capital, Redwood Trust, Atalaya Capital Management and DAG Ventures, which led the company’s Series B, also participated in the Series C round.

New investors included Deer Park Road Management, The Palisades Group and Alpaca VC.

Point’s business is fundamentally a bet on the continued rise in house prices – a risky bet as rising interest rates threaten to derail the historic run of the US housing market. At the same time, rising inflation and borrowing costs have made products like Point’s more attractive to cash-strapped consumers, Lim said.

Point, whose average investment is around $100,000 – typically 15-20% of a home’s value – charges owners a 3% transaction fee up front, but there’s no monthly interest payments. The owners have 30 years to reimburse the company.

The company also collects asset management fees from investors.

The startup’s main competitor, Lim said, is consumer financial products that offer more immediate access to cash, such as credit cards and personal loans.

There are other startups at the intersection of fintech and proptech that similarly offer money for home equity, including HomePace and Splitero, both of which recently completed funding rounds of less than $10 million. EasyKnock, a company that offers sale-leasebacks to homeowners — cash for the whole house, rather than just part of it — raised $57 million in a Series C round earlier this year at an undisclosed valuation.

Point plans to use the new funds to invest in “new products” and expand into 11 new markets, including Ohio and Nevada, Lim said, declining to offer further details. It now operates in 16 states, including New York, California and Florida, as well as Washington, D.C.

“We effectively have unlimited supply from the capital side and unlimited demand from owners,” he said. “Now it’s about hiring as quickly as possible and building the technology platform.”