Business COVID-19 Startups Venture

Noah Secures $150M To Help People Tap Into Their Home Equity With ‘No Interest or Debt’

With the number of unemployed in the U.S. mounting by the week (or even day) due to the COVID-19 pandemic, Americans are getting increasingly nervous about how they will manage financially.

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One fintech startup, San Francisco-based Noah (formerly known as Patch Homes), is out to help them tap into their home equity without accumulating more debt. And it’s just secured $150 million to help it reach that goal.

Noah Founder Sahil Gupta emphasizes the round was not in the form of a venture financing or debt. He describes it as platform capital, or equity, that the company intends to use to invest in homes through its home equity sharing platform. The money came from unnamed institutional investors, including pension funds, he said.

Union Square Ventures led Noah’s $5 million Series A last September, which also included participation from Breega and Techstars Ventures, among others.

The financing caught our eye for a couple of reasons. For one, going from raising $5 million to securing $150 million in equity just seven months is pretty rare. Secondly, the concept of any company offering “interest-free and debt-free cash” right now honestly just sounds too good to be true.

Noah says its platform provides “instant pre-qualification” so that homeowners can get access to their home equity. Specifically, the company says: By just answering three simple questions – the address of the property, the debt balance on the home, and the homeowner’s credit score – Noah can pre-qualify homeowners for financing in less than two minutes.

From there, Noah says, homeowners who want to move forward with the process can submit their application using the company’s customer portal. The company claims it can distribute funds in as little as 15 days.

“We see our homeowner partners as more than just a credit score–our model leverages 80 billion data points across more than 60 different variables in order to obtain a holistic understanding of each investment. This approach is a game-changer for investors, as it provides access to a historically stable asset class and a long-term growth opportunity for them to invest in equity instead of debt,” said Rahul Parulekar, chief investment officer, in a written statement.

Gupta said Noah is different from traditional financial services that offer home equity loans, or HELOCs, because it offers debt-free financing.

Expansion in the works

So just how is the company able to do this? Noah says its “equity sharing agreements” are the key. The company gives homeowners payment-free financing and in return, it “shares a percentage of the home’s future appreciation or depreciation.”

“If the home was to depreciate in value we would share in that loss with the homeowner, just like we share in the gain with the homeowner if the house appreciates in value,” Gupta told Crunchbase News. 

Noah founder Sahil Gupta

Noah says it is actively hiring to help support and scale its product offerings, and will be expanding in East Coast markets during the second quarter. The company currently only operates “in select metro areas,” with a staff of 31 employees, up from 18 a year ago.

As of last September, the company had “underwritten homes collectively worth more than $3.5 billion, expanded into 11 metro areas across the United States, and grown origination 20x year-over-year in 2019” in less than two years since launching its Home Equity Sharing product in California. It has since expanded into 20 markets including Southern California, the San Francisco Bay Area, Portland, Seattle, Denver, Boulder, Colorado Springs and Salt Lake City.

The total volume of home equity investments on Noah’s platform is now 4.5 times that of a year ago, and 11.5 times compared to two years ago, according to Gupta.

Noah formally rebranded in March 2020, saying the word “Noah” is synonymous with “journey.”

“The new name embodies the company’s true mission: partnering with individual homeowners and meeting them wherever they are on their homeownership journey,” the company said at the time.

There are a number of startups out to help people become (or in this case, remain) homeowners. Last year, we covered Divvy Homes’ $43 million Series B round, which was raised with the goal of helping more Americans “move from renters to [home]owners.” Earlier this year, two homebuying platforms announced big rounds. Oakland-based Roofstock, which facilitates investments in rental homes, raised $50 million in a Series D round led by SVB Capital. And New York-based Orchard (formerly called Perch), a platform for buying and selling homes, secured $36 million in a Series B round led by Navitas Capital.

Illustration: Dom Guzman

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