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The US economy may be in a precarious state right now with a presidential election on the horizon and the country still in the grip of the coronavirus pandemic. But thanks in part to lower interest rates, the housing market continues to rise, and today a startup that has developed technology to help it run more efficiently is announcing a major round of growth financing.“data-reactid =” 19 “>The US economy may be in a precarious state right now with a presidential election on the horizon and the country still in the grip of the coronavirus pandemic. But thanks in part to lower interest rates, the housing market continues to rise, and today a startup that has developed technology to help it run more efficiently is announcing a major round of growth financing.
Snapdocs, which is used by some 130,000 real estate professionals to digitally manage the mortgage process and other paperwork and steps related to buying a home, has raised $ 60 million in new equity funding after a few bullish months of business.
In August 2020, a spike in US home sales, reaching its highest level in 14 years, the startup recorded 170,000 home sales, totaling about $ 50 million in transactions, closed in your platform. This accounted for nearly 15% of all transactions made that month in the US Snapdocs is now on track to close 1.5 million deals this year, double its 2019 volume.
In addition to this, the startup’s platform is being used by more than 70% of settlement agents nationwide, with clients such as Bell Bank, LeaderOne Financial Corporation, Googain, Georgia United Credit Union among its clients.
Series C is led by YC Continuity (Snapdocs was part of Y Combinator’s winter 2014 cohort), with existing investors Sequoia Capital, F-Prime Capital, and Founders Fund, and new backers Lachy Groom (formerly Stripe and now a prolific investor) and DocuSign, a strategic sponsor, is also involved.
“Like us, they are on a mission to defragment an ecosystem,” King said, referring to it as a “perfect complement” to Snapdocs’ own efforts.
Snapdocs does not refer to your valuation. Aaron King, founder and CEO, said in an interview that he believes disclosing it is nothing more than “grandstanding,” which is interesting considering that the industry he focuses on, real estate, is about public valuation disclosures, but He noted that most of the $ 103 million the startup has raised to date is still in the bank, which says something about the company’s overall financial health.
And for added context, based on PitchBook data estimates, Snapdocs was valued at $ 200 million in its latest round, in October 2019.
The core premise of Snapdocs is that buying a home requires not only a lot of paperwork, but also a lot of different parties to get on the same page, so to speak, to put the wheels in motion and strike a deal. Not only do you have to pay off the mortgage (with its multiple parts); It also has real estate brokers and agents, home sellers, inspectors and appraisers, the insurance company, the title company and more, about 15 parties in all.
The complexity of everyone working together quickly and efficiently often means that the process of buying and selling a home can be long and expensive. And that’s before the pandemic, with the problems associated with social distancing and remote work, hits us.
Snapdocs’ solution has been to build a cloud platform that helps manage the documents that all these different parties need, providing access to data and the ability to mark or approve things remotely, to speed up the process. It has also created a number of functions, using analytics and artificial intelligence technology, to also help identify potential problems early on and fix them.
King is not your typical tech entrepreneur. He began working on mortgages as a notary while still in high school – he has effectively been in the industry for 23 years, he said – and his early startup efforts focused on one aspect of the complexities that he knew firsthand. : saw the opportunity to rely on technology so that notarized signatures were classified in a legal, orderly and faster way.
He then delved into identifying the possibilities for how technology could be used to improve the larger process, and that’s how Snapdocs was born.
Given how big the real estate market is, it’s the world’s largest asset class, by many estimates, and the number of other industries that technology has “disrupted” over the years, it’s interesting that there are so few that have tried to solve it. . One reason, it seems, is that there hasn’t been enough crossover between tech-savvy and mortgage-savvy, and Snapdocs is a testament to the virtues of building a startup specifically around a tough problem that you know all too well. . .
“Most people have identified this as a technology problem, and much of the technology, such as electronic signatures, has been around for 20 years, but the fragmentation of real estate is the problem,” he said. “We are talking about a massive constellation of companies and workflow. But we are obsessed with the workflow of all these components.”
That’s a position that has helped Snapdocs solidify its position with the industry as well as with investors.
“I have known the Snapdocs team for many years and have always been amazed by their approach and execution in bringing every stakeholder in the mortgage process online,” Anu Hariharan, partner at YC Continuity, said in a statement. “In 2013, Snapdocs started as a notary market before expanding horizontally to title service companies and, more recently, lenders. By connecting the many parties involved in a mortgage on a single platform, Snapdocs is quickly becoming the “operating system” for mortgage closing. Mortgages, like commerce, will change online, providing greater efficiency and a much better customer experience in the outdated home closing process. ”Hariharan has a background in real estate and is joining the board with this round.
Several companies have taken new technology-based approaches to the market to find new and faster ways of doing things and to open up new types of value in the market.
Opendoor, for example, has rethought the entire home buying and selling process, taking on an intermediary role in the process both to take on much of the tougher work of fixing a home and to handle all the difficult stages of sales. process: It’s a role that has recently seen the company catapult to a $ 4.8 billion valuation through a SPAC-based public listing. An interesting idea, King said, but one that only accounts for a small portion of home sales.
Others like Orchard, Reonomy, and Zumper have also raised big rounds thanks to the great promise that the market will continue to grow and the opportunity to participate in that process through new approaches. It’s a sign that “safe as houses” still has a place in the market, even with all the other unknowns at stake.
“Over the next 5 years, the real estate industry will be completely digitized, so many companies are trying to figure out where they belong and how to provide value,” King said.
