Home equity financing platform Patch Homes has exited private beta in California and competed a successful $1 million raise led by Techstars Ventures, KIMA Ventures, Eric Di Benedetto and Airbnb co-founder Nathan Blecharczyk. Funds are earmarked for staffing, marketing, expansion and product development.
“There’s a problem with the current home financing market, in that 67 per cent of homeowner wealth is trapped in home equity,” Patch Homes cofounder Sahil Gupta said. “Most homeowners are asset-rich but cash-poor, and we want to help bridge that gap and solve their cash flow problems. Our model offers home equity financing without any monthly payments, allowing homeowners to tap into their home equity and use their money the way they choose, whether to pay down debt, invest in their future, or make needed home improvements.”
Patch Homes does not charge interest but shares in the future appreciation (or depreciation) of the home’s value. Each contract has a ten-year term with customers able to sell their home before that time without incurring penalties. There are no limitations for how the cash can be used.
“Patch Homes is doing something extremely innovative – they are targeting a market that has remained untapped for years,” Techstars Ventures managing partner Jason Seats said. “There is a gap in the real estate market when it comes to home equity loans. We’ve been very impressed by the team and company’s progress in the past six months and are excited about its potential.”
Patch Homes was founded by Sahil Gupta and Sundeep Ambati. Mr. Gupta worked at Motif Investing and BNY Mellon while Mr. Ambati is a real estate entrepreneur who worked at Starwood Properties/Waypoint Homes and Mission Housing development Corp.