Renovation financing startup RenoFi raised $14 million in Series A funding led by Canaan, with Nyca Partners and CMFG Ventures participating.
Why it matters: The company aims to make the surging demand for home improvements affordable by providing financing to its customers.
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Context: The renovation market is being driven by a combination of aging housing stock, record low inventory, and the COVID-19 pandemic making many homes into hybrid workstations for homeowners.
How it works: RenoFi offers loan origination and underwriting for borrowers seeking to do renovations who may not have built up equity in their homes yet.
“Banks are very good at underwriting the credit risk of a borrower, but they don’t have the capabilities typically to underwrite the risk of a renovation,” RenoFi founder Justin Goldman tells Axios.
For borrowers that wouldn’t usually qualify for a home equity line of credit or a cash-out refinance, RenoFi enables lenders to underwrite loans by considering the value of a home after its renovation.
That allows RenoFi to work with banks and credit unions to offer homeowners more attractive options for financing home improvements.
By the numbers: Now available in 49 out of 50 states in the U.S., homeowners have generated $10 billion in renovation financing demand from lenders on RenoFi’s platform.
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