Tomo Raises $70M to Simplify Mortgage Process

The Evolving Landscape of Mortgage Technology

The number of startups aiming to modernize the mortgage process is substantial, making it challenging to track developments. However, for those who have navigated the complexities of mortgage applications, the need for improvement is readily apparent.

Introducing Tomo: A New Contender

Tomo, a recently launched startup founded by former Zillow executives, is the latest to secure venture capital with the intention of streamlining and accelerating the mortgage process. The company is in its very early stages, initiating operations concurrently with a $70 million seed funding announcement.

This represents a significant seed round – the third-largest in the U.S., according to Crunchbase – and potentially the largest ever witnessed within the real estate technology sector.

Investment Details and Key Players

Ribbit Capital spearheaded the financing round, with additional participation from DST Global partners, NFX, and Zigg Capital.

Founders and Expertise

Greg Schwartz and Carey Armstrong, the founders of Stamford, CT-based Tomo, established the company in the fall of 2020 to challenge established banks in the consumer mortgage market.

CEO Schwartz initially joined Zillow in 2007, where he was instrumental in developing the sales and revenue operations from their inception. Armstrong, serving as Tomo’s chief revenue officer, previously oversaw business strategy, product strategy, and core operations for Zillow’s $1 billion buyer services division.

Core Promises: Speed and Efficiency

Tomo has launched in Seattle, Dallas, and Houston, promising features such as fully underwritten pre-approvals issued “within hours, not days,” and guaranteed on-time closing. This is especially crucial in competitive housing markets where buyers are often engaged in bidding wars.

The company intends to leverage data analytics to facilitate homebuyer closings in as little as 21 days, a timeframe significantly less than the industry average of 47 days. Furthermore, they claim to offer “the lowest rates in the industry” alongside “customer-obsessed service.”

A Focused Approach: Prioritizing the Buyer

Tomo differentiates itself by concentrating exclusively on assisting homebuyers in securing new mortgage loans. Unlike some competitors, the company will not offer refinancing services to existing homeowners.

According to Schwartz, “The big banks have never made more money, yet an experience with their mortgage business has never been worse,” attributing this to a lack of incentive for incumbents to enact fundamental changes.

Competition and Future Outlook

While it is still early to assess Tomo’s success, it faces considerable competition. Recent weeks have seen substantial funding rounds for other digital mortgage startups, including Lower and Accept.

However, Tomo’s investors express strong confidence in its potential.

Investor Perspectives

Nick Huber of Ribbit Capital revealed his firm had been in contact with Schwartz and Armstrong even before the formation of Tomo.

“When we learned that the two of them were working together, we immediately knew that we had to be a part of the journey,” Huber stated. “We gained the conviction to lead the seed round as the team shared more of their vision for the future of home buying, which is a broken experience that they deeply understand and have the insight and relationships to fix.”

A Rival Turned Collaborator

Pete Flint, founder and general partner of NFX, previously competed with Schwartz and Armstrong. Flint co-founded Trulia, serving as its CEO and chairman from its 2005 inception until its acquisition by Zillow for $2.5 billion in 2015.

“We were initially competitors and then deep collaborators after the Trulia/Zillow merger,” Flint explained. Upon Tomo’s formation, Flint noted that NFX “had not seen a team that was so experienced and thoughtful about the entire real estate experience that was going after the mortgage and home buying opportunity.”