Hometap, a startup that offers people a way to borrow against the equity in their homes without taking out loans, has raised $60 million in new funding.
American Family Ventures led the investment, which brings Hometap’s total operating capital raised since its 2017 inception to $95 million. New and existing backers, including Bain Capital, Iconiq Capital, LLC, G20 Ventures, Pillar and General Catalyst, also put money in the latest round.
As its name implies, Hometap offers homeowners a way to “tap” into their home equity by taking on an investor in their property. That investor is essentially providing cash in exchange for a share of their home’s future value. When the home sells or the homeowner “settles” the investment, Boston-based Hometap is paid an agreed-upon percentage of the sale price or current appraised value.
“We started this company not only because we thought it was a good business, but because we wanted to be part of something with a social mission,” CEO Jeffrey Glass said. “There are so many people that are house rich and cash poor — and might have a capital need such as renovating a house or paying for college where, historically their only alternative is to further borrow on, or sell their house.”
While he declined to reveal revenue specifics, Glass said that in the first 10 months of this year, Hometap made four times as many home equity investments as it had during the same time period in 2020. He said the company “more than tripled” its revenue growth this calendar year and more than doubled its employee headcount to 140 in the same time frame.
“We expect to more than double, or perhaps triple again, next year as well,” he told TechCrunch. “We’ve grown 14 consecutive quarters quarter-over-quarter, even right through the pandemic.”
Hometap claims that its model differs from others that charge people a share of appreciation. Such a model is more stressful for homeowners, according to Glass, because they don’t know how much they owe until they’ve sold or settled. Also, the biggest difference between a Hometap investment and a traditional loan is that the startup doesn’t require any monthly payments or charge interest. In fact, some people take the money from Hometap to pay down other debt and improve their FICO scores.
The company offers a 10-year term, meaning that homeowners will need to settle the investment within 10 years, and they can do that at any point in time within that 10-year period. Homeowners can settle their investment by buying out …….