Seattle-based FlyHomes — the two-year-old, innovative online brokerage that launched with the premise of offering buyers frequent flyer miles corresponding to the price of their home purchase price — has announced a $17 million Series A funding round led by Andressen Horowitz, one of Silicon Valley’s most esteemed venture capital firms.
Launched in 2015 by co-founders Stephen Lane and Tushar Garg, former Microsoft employees, FlyHomes was designed to appeal to millennial homebuyers and others who prefer to complete as much of their transactions online as possible — reducing the need for human interaction.
But it also assigns its clients a team of salaried employees, some of whom are not agents, who specialize in each step of the homebuying process. It has expanded from the Greater Seattle Area to Chicago, Boston and the San Francisco Bay Area.
Late last year, the company launched Guaranteed Offers, in which it adds an addendum to the contract of its clients who are pre-approved and qualified that the company would buy the home if the deal fell through.
It’s also launched Cash Offers in the Seattle Area, a program in which FlyHomes will go ahead and purchase a homebuyer’s desired home with all cash, and hold onto it until they secure the necessary funding or mortgage to acquire it themselves, then resell it to the buyer at the guarenteed purchase price — charging the buyer “about 1 percent” for this service, but also giving back up to one percent in cash rewards.
Buyers who have down payments as low as 5 percent can qualify, and the company says its track record is proving the worth of the service, with more than one in two buyers who use it seeing their offers accepted.
The $17 million funding round is designed primarily to help finance the Cash Offers effort and its expansion — the company says it is coming to the South Bay in June and “other markets later this summer,” according to its website. It also plans to launch FlyHomes Mortgage, its own mortgage qualifying subsidiary, later this summer.
“We don’t want sellers to have a dilemma to choose between these different buyers based on how much cash they have because the sellers are just speculating on the likelihood of closing,” Garg said to GeekWire in an interview. “If we do all the due diligence up front, we can front cash on behalf of buyers and for the sellers, give them the most certainty of closing.”
The program, which FlyHomes now plans to expand for more clients and in more cities, was quickly picked up on by investors. This Series A funding round was led by the prestigious venture capital firm Andreessen Horowitz, with additional contributions from Shasta Ventures and Zulily and Blue Nile co-founder Mark Vadon.
“We are always on the lookout for businesses that are on a mission to provide consumers a better level of service for a lower cost than traditional models,” said Alex Rampell, a partner at Andreessen Horowitz, in a statement.
“The real estate industry is at a critical inflection point, and we see the vertical approach that FlyHomes is pioneering as a dramatic improvement to the home purchase experience for homebuyers, sellers and agents. We’re excited to partner with them to expand upon their vision.”
According to FlyHomes, the additional funding will also help the company grow its market in cities like San Francisco, Chicago and Boston.