It’s hard to believe that NYC-based Perch was founded as recently as 2017, given its impact on the city’s tech scene. But this week, the real estate tech platform topped itself yet again with the announcement of a $220 million funding round.
Equity funding makes up $20 million of the round, and that portion will be used to expand the company’s internal operations and technology. FirstMark Capital led the equity round, with Accomplice and Juxtapose also participating.
The remaining $200 million comes in the form of debt financing, which will be used to fund home purchases.
“This round of funding enables us to continue to scale the business across three main areas,” explained co-founder and Head of Growth and CX Phil DeGisi. “First, offering our services to more homeowners throughout our current markets [Dallas-Fort Worth and San Antonio]. Second, expanding the markets that we operate in: We’ll be launching in Austin in Q2 of this year. Third, we’re continuing to hire in our NYC office, as well as for our teams in [Texas].”
Perch’s business model caters to what the company calls “dual trackers,” or individuals who are selling their current homes in order to finance the purchase of new ones. According to Perch’s data, this situation represents roughly 60 percent of all home buyers.
Although common, the situation can lead to a host of headaches. Do you sell your home before you start the search for a new one? Do you schlepp your life into storage and crash at your parents’ house while in escrow? Do you dry up your savings on a down payment while waiting for your current residence to sell? These are all issues that Perch works to remedy.
“We are solving one of the biggest problems in residential real estate: the inability of homeowners to line up the sale of their old home with the purchase of their new home,” said co-founder and CEO Court Cunningham in a statement.
We are solving one of the biggest problems: the inability of homeowners to line up the sale of their old home with the purchase of their new home.”
Using Perch, homeowners receive offers to purchase their homes that remain valid for six months. During this period, Perch works to help homeowners find their next dream homes, while simultaneously taking care of repairing and showing their current ones. Once a new property has been locked down, Perch arranges for a single-day closing.
The catch? Perch charges a 6 percent fee on the sale of the old home, which is comparable to working with a traditional brokerage.
Still, the company feels there is much more to explore.
“We’ve barely scratched the surface of the change that is coming in the residential real estate industry,” said DeGisi. “The companies that win will ultimately be the ones that maniacally focus on the customer. That’s been Perch’s approach so far, and one that will continue in the years ahead.”
Prior to today’s funding news, the company has been hard at work behind the scenes, building out a leadership team whose resumes collectively read like a Fortune 500 roundup. Recent hires include CFO and Head of Real Estate Sean Roberts (formerly principal at TPG Real Estate), Head of Consumer Product Rahil Esmail (formerly director of product at Harry’s) and Director of Market Expansion Aaron Emrich (formerly general manager at Uber).
Perch’s proprietary algorithms analyze the entirety of the housing market and can conjure market value offers in just 24 hours. Currently, the company is operating within the San Antonio and Dallas-Fort Worth markets and, as of December 2018, has earned 2 percent market share of all San Antonio real estate.
Meanwhile, the company maintains an NYC headquarters.
“[It’s] the perfect location for our headquarters,” said DeGisi. “Not just for the great access to talent, but also we find that a lot of New Yorkers have a deep interest in real estate, so it’s a great fit for us.”