Renovation financing startup RenoFi raised $14 million in Series A funding led by Canaan, with Nyca Partners and CMFG Ventures participating.
Why it matters: The company aims to make the surging demand for home improvements affordable by providing financing to its customers.
Context: The renovation market is being driven by a combination of aging housing stock, record low inventory, and the COVID-19 pandemic making many homes into hybrid workstations for homeowners.
- Add in supply chain shocks and high labor demands and those who wish to do renovations are being struck by sticker shock when they get a quote from a general contractor.
How it works: RenoFi offers loan origination and underwriting for borrowers seeking to do renovations who may not have built up equity in their homes yet.
- “Banks are very good at underwriting the credit risk of a borrower, but they don’t have the capabilities typically to underwrite the risk of a renovation,” RenoFi founder Justin Goldman tells Axios.
- For borrowers that wouldn’t usually qualify for a home equity line of credit or a cash-out refinance, RenoFi enables lenders to underwrite loans by considering the value of a home after its renovation.
- That allows RenoFi to work with banks and credit unions to offer homeowners more attractive options for financing home improvements.
By the numbers: Now available in 49 out of 50 states in the U.S., homeowners have generated $10 billion in renovation financing demand from lenders on RenoFi’s platform.
- And the company has seen more than $2 billion in renovation financing requests in just the first three months of 2022.