Between skyrocketing home prices, record low interest rates, and a red hot seller’s market nationwide, the real estate industry has been especially frenzied over the last 18 months. In the early days of the pandemic, it looked like the housing market was on its way toward a crash. But that quickly changed. In fact, bidding wars have gotten so intense this year that home-price growth hit a record high in June, stoked by robust demand outpacing the number of homes for sale.
This has led to massive growth for real estate tech startup Ribbon, which helps users make all-cash offers — a key advantage when buying a home in a competitive market. The NYC company says it has grown 15x over the past year and is now gearing up for an aggressive national expansion thanks to a $150 million investment it recently secured.
Announced Tuesday, the round comprises $75 million in Series C equity financing and another $75 million in additional working capital. The company has also upsized its $500 million credit facility. The Series C was led by Greenspring Associates, with participation from several big VC players like Greylock, Bain Capital Ventures and Jake Seid, a managing director at Stone Bridge Ventures.
“In the wake of Ribbon’s exponential growth, we are excited to partner as they grow their footprint in the United States, and help more people compete for — and realize — homeownership,” Seyonne Kang, a partner at Greenspring Associates, said in a statement. “In a moment when one-third of home offers are cash, consumers have a competitive entry point with Ribbon’s novel ecosystem approach.”
Essentially, Ribbon wants to level the playing field when it comes to home buying, giving folks the chance to pay upfront with cash, even if they wouldn’t ordinarily be able to do so. The company does this by stepping in on behalf of the buyer, making a full cash offer, and reserving the home for that buyer, who then pays rent directly to Ribbon until they can get their own mortgage. This means the buyer gets not only a competitive advantage but also potentially a quicker closing time and even discounts.
This model has been especially appealing amid such a cutthroat housing market. Between the first and second quarter of 2021, Ribbon says it has more than doubled its number of agent registrations, leading to 6x growth in accepted offers and enabling 6x the number of home sales. All told, the company says it has grown its network of agents and loan officers to a whopping 20,000, which has led to $650 million in home offers each month on the platform.
“The historically low inventory of homes and hypercompetitive housing market has opened eyes. Every day buyers lose out on homes as affordability disappears and other solutions for agents and lenders are insufficient to meet the moment. They all deserve better,” co-founder and CEO Shaival Shah said in a statement. “Ribbon has become stronger by partnering with the ecosystem of agents and lenders — together we’ve empowered the consumer with best-in-class software and home financing solutions.”
Of course, Ribbon is not the only company of its kind riding this wave. The pandemic has fueled big successes across the world of real estate tech, especially here in NYC. Meanwhile, Homeward, an Austin startup that also facilitates cash offers, raised a whopping $371 million last spring along with Denver-based Accept.ai, which closed on a $90 million round in June amid a massive surge in demand.
Like both of these companies, the next step for Ribbon is expansion. In a recent blog post, a spokesperson said the company plans to be in half of the United States by 2023. It also plans to expand its team, and currently has more than 30 open tech positions available at its NYC headquarters.
