Spruce, a New York City-based startup providing digital title insurance, escrow and closing services, has raised $15.6 million in Series A-1 funding — mere months after state legislators failed to pass a bill that would have tightened regulations on the industry.
The startup, which launched in 2016 with a product that allows buyers and agents to finalize closings online through an API, is part of wave of new companies now digitizing common transactions in the homebuying process. The new fund bring’s the company’s total series A windfall to $19.1 million. Bessemer Venture Partners, Omidyar Network, and Collaborative Fund were among the investors.
Inman had the chance to speak to Spruce’s CEO, Patrick Burns, about his company, title and escrow services and why real estate’s paper-obsession is a serious problem.
Is it exciting to see how much money your company has raised?
Patrick Burns: We’re extremely pleased with it. It will allow us to continue to grow. It’s all part of our strategic plan that we laid out at the beginning of the year. The most important thing is that it enables us to grow the team and continue to serve more and more customers.
Do you think the wide range of investors is proof interest in real estate technology is gaining speed?
I think that’s been a growing trend for a few years. It’s been amazing — we’re recognizing that such a marketable industry has been, for so long, underserved by technology. This is really interesting because all the problems facing the industry are market challenges that are at the intersection of technology and traditional real estate models that are not going to go anywhere.
How can real estate be better served with technology?
There’s no limit to the potential of technology when applied thoughtfully to the real business problems that we face. We’re seeing it in every area of real estate. We’re not only seeing it from startup companies, from venture-backed companies. We’re also seeing it increasingly from what you may think of now as more established companies. There’s a lot of investment coming from what you may think of as more traditional companies that are really recognizing how technology can grow their own businesses. That’s not always something you see in other industries.
Do you see the real estate industry’s present-day reliance on paper documents as a problem?
The goal isn’t to go paperless for the sake of going paperless. The goal is to become more efficient, more transparent and to create better user experiences. For example, if I’m relying on paper documents to communicate information to homebuyers, there’s a limit to how transparent I can be. The customer isn’t seeing, for example, certain statements or transaction documents until they’re presented to them in a paper format. That’s where you can start to see surprise or confusion in the transaction.
There was a recent survey that found a third of homeowners said that buying their home the most stressful experience of their life. This is emblematic of the fact that these transactions are difficult on the one hand and opaque and confusing and surprising on the other hand. Our end mission is not to become paperless. Our end mission is to create transparency, efficiency and a happy experience both for the homebuyers and sellers but also for the real estate companies.
What will the money raised go toward?
It will primarily go toward growing the team. We have an ambitious project we’re starting. We also want to earn a lot of new customers. We want to invest heavily in our team both to continue to build our technology as well as to expand our operations team.
Where do you see the company going in the long-term?
Over the next year, we expect to continue to expand. We expect to reach clients in every state and continue to roll out products that help us achieve our mission of creating and enabling secure real estate transactions.
Do you think that your product, more specifically, and technology, more broadly, can change the real estate industry for the better?
As anyone involved in real estate will tell you, it’s an ecosystem. Title and escrow is an important part of that ecosystem but it’s not the entire ecosystem. What we hope to do is work with other branches of the real estate ecosystem to create an end-to-end experience that works better for everyone. By doing that, we’re able to create an ecosystem that will look a lot different from what it looks like today. And I think that’s really the magic in real estate more than anywhere else. It’s an industry that requires working together for the same goals.