Meet HomeLight — Once a realtor referral engine and now real-estate’s most powerful platform
HomeLight, a leading proptech platform, announced today $109 million in financing, which includes $63 million in Series C equity and $46 million in additional funds to fuel mortgage operations. You might be familiar with HomeLight if you are one of their 400,000 customers or from their TV ad commercials (see this recent commercial explaining how HomeLight can help you sell your home faster and for more money).
As HomeLight’s first investors, we are excited, though not at all surprised with how much the company has grown since our seed investment in 2012.
While HomeLight is already considered a leader in the proptech market, it has barely scratched the surface. Its potential to keep hyper-growing remains unbounded. We place HomeLight squarely in the ranks of other Group 11 category-defining companies such as TripActions, SoFi, and Next Insurance.
It started with an idea to simplify a complicated process
We first met HomeLight’s founder and CEO Drew Uher in December 2011 at the introduction of our friend Dror Berman at Innovation Endeavors. At that first meeting, Drew shared his own experience and frustration in trying to buy his first home.
In this process, Drew found that it was easy to find a real estate agent online, but it was not easy to ascertain whether or not that agent is a top performer who operates in and understands the local area, and who has their client’s best interests in mind. Drew saw a massive industry inundated with outdated processes, unreasonable costs, and heavy information asymmetry.
On the flipside, Drew also saw over 1.3 million realtors clamoring for quality connections with homebuyers and sellers. He found a marketplace that was worthwhile to redefine.
Drew’s bold vision of the future was to build a company that would become the “Amazon of real estate,” an online marketplace for frictionless transactions where HomeLight would serve as an objective, one-stop-shop for all buyer, seller, and real estate agent needs.
From a product into a one-stop-shop platform
HomeLight’s first endeavor was to match the best real estate agents with people seeking to buy or sell a house. They spent years building machine learning technology using big data that determines which agents or cash buyers are best suited to serve clients based on objective performance metrics.
As a result of this machine learning driven matching, agents sell listings referred to them by HomeLight for an average of 5% more in listing price and seven days faster than other agents. HomeLight has grown their network to over 70,000 agents, and has matched over 400,000 people with top agents.
Over time, HomeLight grew from a product into a full-service platform, introducing services such as title and escrow, equity sharing, general contractor referrals, Simple Sale, and mortgage. The company is now a one-stop-shop for buyers and sellers to manage all their home transaction needs.
What makes HomeLight a billion-dollar company?
We are in the early innings of the proptech disruption as it pertains to U.S. real estate. Americans transact $1.8 trillion of residential real estate each year, generating $84 billion in agent commissions. Due to the sheer size of the real estate opportunity and HomeLight’s ability to stitch together the components of a seamless home sale transaction, we believe the company’s future growth is (almost) infinite.
HomeLight’s impressive triple-digit annual growth since inception is one indicator of the company’s trajectory and testament to the company’s ability to meet the growing demands of the changing marketplace.
Looking at the existing market, the big players like Zillow, Opendoor, Redfin, Compass, and Realtor.com combined comprise $2.8 billion, a mere 3% of the $80 billion total addressable market.
Zillow’s primary revenue source is real estate agent advertising, yet they are changing tactics to capture more of this blue ocean opportunity. In Zillow’s most recent Q2 2019 shareholder’s letter, management wrote about their aim to transform from a “search and find” data company to a full-fledged, transaction-driven platform to better position itself to gain market share (Zillow currently has a market cap of over $6 billion).
For instance, in 15 months, Zillow has launched Zillow Offers (comparable to HomeLight’s Agent Matching Platform), Zillow Home Loans (HomeLight’s Mortgage business), and is evolving their Premier Agent and Rentals marketplace into a service offerings platform (HomeLight’s Services Platform).
These recent pivots by Zillow closely mirror HomeLight’s existing strategy, which Drew had envisioned from the start. This is a clear indication that HomeLight is leading the charge and determining the direction in which the real estate market and agent demands are shifting. HomeLight also has a 7-year head start to other companies in the proptech space who are hoping to monetize agent referrals.
Another key driver of HomeLight’s success is their robust and unique technology stack. HomeLight has wisely focused on targeting home sellers and agents, differentiating itself from other players in the space. The company constantly analyzes millions of real estate transactions and tens of thousands of reviews nationwide in order to match sellers with the top real estate agents in the most optimal fashion.
Lastly, and this is something that is hard to put a dollar value on, we believe in HomeLight’s impressive growth trajectory because of the company’s culture. Drew has meticulously crafted HomeLight’s leadership and culture into that of an award-winning workplace, providing the best benefits, perks and compensation to foster employee happiness. HomeLight, with over 200 employees today, has been awarded as one of the best places to work in the country.
Group 11 lighting the way
The team at Group 11 has been an early investor and supporter of HomeLight. As an early investor and continuous supporter of HomeLight, we have believed from the beginning that HomeLight contains every necessary element to become a category-defining company.
We first invested in HomeLight’s seed round because we believed in Drew’s long-term vision. At that time, HomeLight’s valuation was a mere fraction of its current valuation.
A few years later, we introduced HomeLight to Zeev Ventures, who led their Series A round where we also participated. HomeLight’s use of big data and their increased product offerings demonstrated continuous value, and we increased our investment into every one of HomeLight’s subsequent financing rounds.
Today, having participated in this Series C round alongside Zeev Ventures and others, Group 11 remains the third-largest investor in the company, and I continue to serve on its Board alongside co-investors Menlo Ventures and Zeev Ventures.
Congratulations to co-founder and CEO Drew Uher, co-founder and COO Sumant Sridharan, and to the entire HomeLight team. Congratulations also to co-investors Zeev Ventures, Menlo Ventures, Bullpen Capital, Crosslink Capital and Stereo Capital.