Upequity Secures $25M Funding for Cash-Pay Mortgages

UpEquity Secures $25 Million Funding to Revolutionize Homebuying

Austin-based UpEquity has successfully obtained $25 million in combined equity and debt financing, with the primary objective of better serving the needs of consumers within the mortgage sector.

Addressing Inefficiencies in the Housing Market

Tim Herman, the company’s chief executive, founded the mortgage lending firm to capitalize on perceived shortcomings within the $2 trillion U.S. housing market.

Herman asserts that many established financial institutions and property technology firms address the effects of market inefficiencies rather than the underlying causes.

How UpEquity's Cash Offer System Works

The company provides complimentary cash offers, but levies a 2.5% fee on the loans extended to prospective homebuyers. This enables them to submit offers prior to completing the conventional mortgage application process through a traditional bank.

Homeowners then remit payments directly to UpEquity, which are used to settle the mortgage on the property.

“Our cash offer functions as a guarantee, ensuring mortgage approval during the escrow period,” Herman explained.

From Naval Aviation to PropTech

A graduate of the U.S. Naval Academy and a former fighter pilot, Herman identified real estate as a primary pathway to wealth creation for himself and his family, particularly given their transient lifestyle and limited investment resources.

Following his service in the Navy, Herman pursued an education at Harvard Business School, where he connected with his co-founder, Louis Wilson.

The two entrepreneurs initiated UpEquity while students in Boston.

Relocation to Austin

Subsequently, they relocated the company’s headquarters to Austin, Texas, drawn by the city’s thriving housing market and comparatively lenient regulatory landscape.

The Advantage of an All-Cash Offer

The core value proposition for customers is the ability to present an all-cash offer, significantly increasing the probability of a successful home purchase. This is a financial advantage inaccessible to approximately 90% of the American population, according to Herman.

There is no risk for the seller; should a buyer not proceed with the purchase, UpEquity assumes ownership of the property.

Proven Success Rate

To date, the company has facilitated 300 transactions, with only two resulting in failure.

This strong performance has enabled UpEquity to secure $7.5 million in venture capital and $17.5 million in venture debt for loan origination.

Funding to Accelerate Growth and Product Development

The Series A funding round was spearheaded by Next Coast Ventures, and the capital will be allocated to product development aimed at reducing the closing timeline for real estate agents – who serve as the company’s sales force – to just 10 days.

“Our overarching aim is to align the mortgage industry with the best interests of consumers,” Herman stated. “This funding demonstrates that consumers, real estate professionals, and investors recognize the benefits of streamlining the homebuying process, fostering both individual progress and the realization of the American Dream.”

Expansion into New Markets

UpEquity has expanded its operations beyond Texas, now serving Colorado, Florida, and California, having originated $100 million in mortgages during 2020.

Industry Recognition

“As the real estate landscape evolves amidst constrained supply and intense competition, UpEquity is leading the charge in PropTech innovation,” commented Thomas Ball, managing director at Next Coast Ventures.

“While much innovation has focused on the initial stages of the process, no one has yet significantly accelerated the steps following the borrower’s application. UpEquity possesses the team, expertise, and technology to not only thrive but to disrupt the mortgage lending market and establish itself as a leader.”