Renovation financing startup RenoFi raised $14 million in Series A funding led by Canaan, with participation from Nyca Partners and CMFG Ventures.
Why it matters: The company’s goal is to make the growing demand for home improvement affordable by offering financing to its customers.
Context: The renovation market is being driven by a combination of aging housing stocks, record low inventories and the COVID-19 pandemic, which is turning many homes into hybrid jobs for homeowners.
- Add to this supply chain shocks and heavy labor demands, and those looking to undertake renovations are hit with sticker shock when they receive an offer from a general contractor.
How it works: RenoFi offers lending and underwriting for borrowers looking to complete renovations who may not yet have built equity in their homes.
- “Banks are very good at insuring a borrower’s credit risk, but they don’t typically have the skills to insure the risk of a renovation,” RenoFi founder Justin Goldman told Axios.
- For borrowers who would not normally qualify for a home equity line of credit or cash refinance, RenoFi allows lenders to underwrite credit by considering a home’s value after it has been renovated.
- This allows RenoFi to work with banks and credit unions to offer homeowners more attractive options for financing renovations.
Using the numbers: Now available in 49 out of 50 states, homeowners have generated $10 billion in renovation financing demand from lenders on RenoFi’s platform.
- And the company has received more than $2 billion in financing requests for renovations in the first three months of 2022 alone.