Renovation finance startup RenoFi has raised $14m in Series A funding led by Canaan, with participation from Nyca Partners and CMFG Ventures.
Why is this important: The company aims to make the growing demand for home improvements affordable by offering financing to its customers.
The context: The renovation market is being driven by a combination of aging housing stock, record high inventory and the COVID-19 pandemic that is turning many homes into hybrid work stations for homeowners.
- Add to that supply chain shocks and high labor demands and those looking to do renovations are hit with sticker shock when they get a quote from a general contractor.
How it works: RenoFi offers loan origination and underwriting for borrowers who want to make renovations and who may not have built up equity in their home yet.
- “Banks are very good at underwriting a borrower’s credit risk, but they generally lack the capabilities to underwrite the risk of a renovation,” RenoFi founder Justin Goldman told Axios.
- For borrowers who would not typically qualify for a home equity line of credit or cash refinance, RenoFi allows lenders to underwrite loans based on the value of a home after it’s been renovated.
- This allows RenoFi to work with banks and credit unions to provide homeowners with more attractive options for home improvement financing.
By the numbers: Now available in 49 of the 50 U.S. states, homeowners have generated $10 billion in demand for renovation financing from lenders on RenoFi’s platform.
- And the company has seen more than $2 billion in renovation funding applications in the first three months of 2022 alone.