Andreesen Horowitz-backed Flyhomes just snagged $141 million to expand its next-gen brokerage

Flyhomes

Flyhomes cofounders Steve Land and Tushar Garg

• Flyhomes, a real-estate brokerage startup, announced $141 million in new funding on Thursday, though declined to disclose the company's valuation.
• Canvas Ventures led the $21 million Series B round, with participation from returning investor Andreesen Horowitz. Flyhomes also raised $120 million in debt.
• Flyhomes offers buyers cash to make an upfront purchase, and also recently introduced a "Trade Up" service to set a guaranteed floor price for sellers.
• Flyhomes is part of a wave of startups looking to shake up how real estate is bought and sold.
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Flyhomes, a startup real-estate brokerage that fronts buyers cash to bid on homes, said on Thursday it has raised a combined $141 million in debt and equity.

Canvas Ventures led the $21 million Series B round, with participation from returning investor Andreesen Horowitz. Flyhomes also raised $120 million in debt to finance its products. The company declined to disclose a valuation.

Brokerages that are looking to put a new twist on the real estate business are attracting waves of VC cash. Compass was valued at $6.4 billion after raising $370 million in July from SoftBank's Vision Fund, Dragoneer Investment Group, and others.

Ordinary homebuyers are facing heavy competition from investors flush with cash. Flyhomes, which launched in Seattle in 2015, offers services to help buyers put in cash bids - its brokers provide the money upfront for the buyer, who then puts together the financing to pay back Flyhomes. Flyhomes is paid by the seller's commission, like a typical brokerage.

The company has recently added in-house mortgages and title-insurance as well.

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Flyhomes was started by Steve Lane and Tushar Garg, MBA students at Northwestern. Neither had real estate experience, but began to experiment with different approaches to the home-buying process.

"We came into the industry as customers," Garg said. "Our way of solving problems was very different, we were solving for our friends."

The company has expanded to Portland, southern California, and Boston. It recently launched a "Trade Up" program for buyers who also need to sell the home they currently live in.

Flyhomes guarantees sellers a floor price for the home, and buys it for that price if it can't sell it in 90 days. The seller gets to keep any upside if the house sells on the market, and pays Flyhomes both the buyer's agent and seller's agent commission if the company buys at the guaranteed price.

That's a different approach than iBuyers, which pay cash upfront to quickly buy homes, typically charging a higher fee than a real estate agent commission, and then resell them. Startup iBuyer Opendoor in July partnered with broker Redfin, and real estate marketplace Zillow has also been expanding its own service.

See more: Investing in real estate tech companies like Zillow and Compass is a nearly $15 billion opportunity. 3 top VCs break down the areas and startups they think will boom.

Flyhomes is not the only company trying to help homebuyers compete with full-pocketed investors in busy markets. Ribbon, founded in 2017, raised $225 million in an unspecified mix of debt and equity from Bain Capital Ventures, Greylock, NFX and NYCA. Board launched in 2019 out of a Y Combinator incubation round.

Flyhomes' $2 million seed round was led by Blue Nile and Zulilly-founder Mark Vadon, with participation from the Pritzker Group VC and Al Goldstein, the CEO of online lender Avant. Last year's Series A raised $17 million from Andreessen Horowitz with Mark Vadon returning and Shasta Ventures participating.