Sundae Raises $80M to Revolutionize Residential Real Estate

Sundae Secures $80 Million in Series C Funding

Sundae, a real estate marketplace focused on connecting sellers with buyers for properties needing renovation or repair, has successfully completed a $80 million Series C funding round. This financing was jointly led by Fifth Wall and General Global Capital.

Investment Details and Company Growth

Several other investors participated in this funding round, including QED Investors, Wellington Management, Susa Ventures, and Founders Fund. Additional contributions came from First American Financial, Prudence Holdings, Crossover VC, Intersect Capital, Gaingels, and Oberndorf Ventures.

This latest investment brings the total funding raised by the San Francisco-based company to $135 million since its establishment in August 2018. It represents the third funding event for Sundae within a 13-month period.

Financial Performance and Business Model

While the specific valuation of the Series C round remains undisclosed, Sundae reported a substantial 600% year-over-year revenue increase between June 2020 and June 2021.

The company’s core mission is to assist individuals needing to sell properties that require updating or are in a state of disrepair, often due to life events like job changes, health issues, or divorce.

Addressing Vulnerable Sellers

CEO and co-founder Josh Stech emphasizes the potential for vulnerable sellers to be exploited by investors focused on quick profits. Sundae aims to mitigate this risk.

Because sellers often lack the resources for pre-sale renovations, Sundae acts as an intermediary, listing properties on its platform to a network of approximately 2,600 pre-qualified buyers.

The Marketplace and Cash Advances

Sundae’s platform facilitates competitive bidding among “fix and flippers” interested in acquiring distressed properties. Upon acceptance of an offer and completion of an inspection, sellers receive a $10,000 cash advance to assist with relocation or other expenses.

“Our objective is to disrupt the practices of wholesalers who take advantage of sellers in difficult situations,” Stech stated. “The equity lost to wholesalers can significantly impact a seller’s ability to resolve debts or achieve financial security.”

Offer Volume and Geographic Expansion

Sundae reports that sellers typically receive around 10 offers within three days of listing their property on the marketplace.

Since its initial launch in January 2019, the company has steadily expanded its operational footprint. It has grown from serving four California markets at the end of last year to now encompassing 14 markets across Florida, Colorado, Georgia, Texas, and Utah.

Revenue Generation and Investor Platform

Sundae generates revenue by charging a fee to buyers when it facilitates the assignment of a property to them.

In the first quarter of the current year, the company launched a dedicated online marketplace specifically for investors. This platform provides access to property details, including photos, floor plans, 3D tours, and third-party inspection reports.

Future Plans and Market Opportunity

The newly acquired capital will be allocated to expanding into new geographic markets, enhancing the platform’s functionality, and increasing brand recognition. The company also intends to grow its team, currently comprised of 180 mostly remote employees.

Vik Chawla, a partner at Fifth Wall, highlights Sundae’s focus on a historically underserved segment of the residential real estate market.

“Their marketplace model effectively addresses a critical need for sellers while simultaneously providing investors with a reliable source of investment opportunities,” Chawla commented.

Previous Funding and Notable Investors

Sundae previously secured $36 million in a Series B funding round in December 2020.

The latest funding round also attracted investment from a diverse group of angel investors, including actor Will Smith, music artists KYGO and Palm Tree Crew, NFL players Richard Seymour, DK Metcalf, Matt Chapman, Alex Caruso, Aaron Gordon, Solomon Hill, Kelly Olynyk, and Isaiah Thomas, NBA champion Klay Thompson, and soccer player Weston McKennie.