Perch, a home-buying and selling platform, has raised $220 million in a combination of equity ($20 million) to fund operations and debt ($200 million) to finance home purchasing. The equity investment was led by existing investors FirstMark Capital, with participation from Accomplice and Juxtapose. Perch declined to disclose the debt lender in the deal.
Perch was founded in September of 2017 by Court Cunningham and Phil DeGisi.
The premise of Perch is to focus on the largest segment of home buyers on the market, which Perch calls “dual trackers.” These buyers are also in the process of selling their current home at the same time.
This is a generally difficult and taxing process that forces people to choose between the uncertainty of a huge investment without having sold their current home or moving into a short-term rental indefinitely until they find the right new home. The alternative is to make an offer to purchase the new home contingent upon the sale of their current home, which tends to be an unattractive proposition for sellers, according to Perch.
Perch solves this for clients by making an offer on their homes that is valid for six months, and then helping them find a new home. Perch also conducts the closing on both homes in the same day.
There is a certain amount of risk associated with this business model considering the fluctuation of the housing market, but that doesn’t seem to be an issue for investors of Perch or their competition. Looking at the way it works now, however, it’s hard to imagine that tech won’t have gotten a strong foothold within the real estate industry over the next few decades.
Which explains the huge influx of cash going to companies the industry calls “iBuyers,” such as RedFin, Zillow, Opendoor and OfferPad. Opendoor recently filed to raise $200 million at a $3.7 billion valuation in February, while OfferPad closed a Series C that brings total equity and debt raised to $975 million.
Perch, however, doesn’t consider itself an iBuyer.
“An iBuyer will buy your house for you at a certain price in an easy and convenient transaction,” said co-founder and CEO Court Cunningham, referencing the offerings of Perch’s competition. “It adds a lot of value, but that’s a feature of a complete offering, not the offering in and of itself.”
In short, Perch wants to tie together the three branches of home buying and selling — closing, title and mortgage — for the 60 percent of the market comprised by “dual trackers.”
For now, Perch is squared away on the closing and title portion of the process, offering e-closing and e-notary to let users complete the transaction from the comfort of their own home. The company plans to offer its own mortgage brokerage service to customers at some point this year, and though it’s not on the roadmap anytime soon, Cunningham said he isn’t closed off to the idea of Perch becoming an underwriter somewhere down the line.
Not only will mortgages add a new revenue stream for Perch, but Cunningham sees the convenience of having everything in one place as a huge opportunity for customer acquisition.