Austin-based mortgage tech platform UpEquity raised $25 million in a Series A funding round led by Next Coast Ventures.
The funding consists of $7.5 million in equity financing and $17.5 million in venture debt, UpEquity said in a statement.
The funding will go toward product development and business development with real estate agents to reduce their time-to-close to 10 days, significantly higher than the industry average.
UpEquity essentially makes free cash offers but charges interest – currently 2.5% – on the loans it provides to homeowners, who can make an offer on a house without having to go through a bank to get a mortgage. Homeowners then make monthly payments directly to UpEquity to pay off the mortgage on the home.
The tech startup says its method is a way to “democratize” the homebuilding process, especially for first-time homebuyers. Sellers are more likely to accept cash offers, which UpEquity claims translates into up to 4% savings for the all-cash buyer.
Today, both sellers and buyers expect to handle a majority of the process online. For a well-prepared real estate brokerage, this holds a promising future.
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“Our goal is to finally align the mortgage industry with consumer interests,” Herman said in a statement. “This funding is validation that consumers, real estate agents and venture investors understand the power of removing friction from the home-buying process, not only for personal advancement, but to attain the American Dream.”
The company uses uses automated underwriting technology to process the loan.
The company claims it originated $100 million in mortgages in 2020. According to NMLS data, UpEquity has eight mortgage loan originators working at the company. Dani Hernandez is head of mortgages at the Austin-based startup.
The company is currently originating loans in Texas, Colorado, Florida and California. It plans to expand into new markets this year.