Hometap, a startup out of Boston that allows people to borrow against the equity in their homes without taking out loans, announced Monday it raised $60 million of fresh funding. The round was led by American Family Ventures, with participation from familiar names like Bain Capital, ICONIQ Capital and General Catalyst.
As its name would suggest, Hometap allows homeowners to “tap” into their home equity by taking on an investor, who essentially provides cash in exchange for a share of the home’s future value. Homeowners can use that money however they want, and have ten years to either sell the home and pay Hometap an agreed-upon percentage, or pay the company a percentage of the home’s current value in cash.
Unlike traditional home equity loans, lines of credit or refinancing, this model does not require monthly payments or charge interest. Instead, Hometap gets a cut of a given home’s value, whether it rises, dips or flatlines. Plus, its automated technology is designed to make the process as easy as possible for the homeowner and investor alike, providing financial and forecasting models to ensure they make the right decision.
This level of accessibility is exactly what attracted American Family Ventures in the first place, says managing director Dan Reed. In fact, the VC firm also participated in Hometap’s $100 million funding round in 2019, and has been an investor since 2018.
“By leading this funding round, we’re casting another vote of confidence in [Hometap’s] ability to accelerate its progress,” Reed said in a statement. “We look forward to a continued partnership that makes a positive difference in the lives of homeowners.”
This funding caps off a year of massive growth for Hometap, which claims it had four times as many home equity investment this year as it did in 2020. Today, the company is active in 15 states, including Massachusetts, and the startup will use some of this money to expand its operations nationwide. The funding will also be used to scale its team as it continues to grow.
“I am excited about our growth trajectory and am truly grateful to our team for working tirelessly to put homeowners first as we continue to scale the business,” Hometap CEO Jeffrey Glass said in a statement. “We remain focused on delivering alternative financing solutions to more homeowners in need while continuing to provide the personalized service they’ve come to expect from us.”
