Sundae, a residential real estate marketplace that pairs sellers of dated or damaged property with potential buyers, has raised $80 million in a Series C funding round co-led by Fifth Wall and General Global Capital.
QED Investors, Wellington Management, Susa Ventures, Founders Fund, First American Financial, Prudence Holdings, Crossover VC, Intersect Capital, Gaingels and Oberndorf Ventures also participated in the financing. The round marks San Francisco-based Sundae’s third financing in a 13-month time frame, bringing its total raised since its August 2018 inception to $135 million.
The San Francisco-based company declined to reveal at what valuation its Series C was raised. It also declined to provide hard revenue figures, saying only that it saw a 600% year-over-year increase in revenue from June 2020 to June 2021.
The startup aims to help people who need to sell dated or “damaged” properties for a variety of reasons — such as job loss, illness or divorce. In some cases, according to CEO and co-founder Josh Stech, such vulnerable sellers get taken advantage of by “predatory fix and flippers” seeking to capitalize on their misfortune.
Since sellers in these situations don’t typically have the funds to fix up their properties before selling, Sundae lists the property for them on its platform – serving as an intermediary between sellers and investors. There, it is visible to about 2,600 qualified off-market buyers.
The company essentially aims to aggregate demand from “fix and flippers,” who use the marketplace to bid against each other for distressed properties. If the seller accepts and an inspection is completed, the company offers a $10,000 cash advance before closing to help homeowners with moving costs or other expenses.
“Our goal is to displace wholesalers who exploit desperate or uninformed sellers and lock them into a contract which they turn around and assign to a property investor at a steep profit,” Stech said. “The tens of thousands of dollars in lost equity that goes to a wholesaler could mean the difference between paying off debts, or having enough money to retire.”
Sundae claims that on average, sellers receive 10 offers within three days on its marketplace.
Since its launch in January 2019, the startup has slowly been expanding its marketplace geographically. It went from operating in four markets in California at the end of last year to now operating in 14 markets across Florida, Colorado, Georgia, Texas and Utah.
Sundae makes money by charging buyers in its investor marketplace a fee when it “assigns” them a property.
In the first quarter of this year, the startup launched a dedicated online marketplace for investors, where they can view properties and submit offers. Once an investor signs up to join the marketplace, they can access the full inventory of properties, including information such as photos, floor plan, 3D walkthrough and a third-party inspection report.
Looking ahead, the company plans to use its new capital to expand to new markets, invest in its platform and “build brand awareness.” It also, of course, plans to boost its current headcount of 180 mostly remote employees.
Vik Chawla, a partner at Fifth Wall, believes Sundae is serving a segment of the residential real estate market that has historically been overlooked.
“Their marketplace model simultaneously solves a crucial pain point for sellers by disrupting the wholesale industry, while delivering a platform that property investors can count on for reliable investment opportunities,” he said.
The company last raised $36 million in a Series B funding round in December 2020.
Interestingly, a slew of angel investors — including a number of athletes and celebrities — also put money in the company’s latest round, including: actor Will Smith, KYGO and Palm Tree Crew, three-time NFL Super Bowl champion Richard Seymour of 93 Ventures, NFL All-Pro DK Metcalf of the Seattle Seahawks, Matt Chapman of the Oakland A’s, Alex Caruso of the Los Angeles Lakers, Aaron Gordon of the Denver Nuggets, Solomon Hill of the Atlanta Hawks, Kelly Olynyk of the Houston Rockets, NBA All-Star Isaiah Thomas, three-time NBA Champion & Gold Medalist Klay Thompson of the Golden State Warriors, Hassan Whiteside of the Sacramento Kings, Andrew Wiggins of the Golden State Warriors and 2020 U.S. Soccer Player of the Year and Juventus midfielder, Weston McKennie.