A Dallas-based startup focused on helping small real estate investors has secured $35 million in funding.
The company, Backflip, landed an $8 million equity seed round and $27 million in dedicated debt funding. It will use the money to expand its product development team and launch to the public in Texas and Colorado on June 16.
The startup’s mobile app allows its members to find residential properties of up to four units to buy and renovate. The app includes data and tools to help investors find homes to invest in, analyze the opportunities and get financing through in-house lender Backflip Capital.
“We believe that Wall Street, Opendoor and these other big companies that are doing this at scale should not be the only companies that have access to this type of technology, this type of data, let alone this type of capital,” said Backflip co Founder and CEO Josh Ernst. “You really need a platform that can aggregate and scale the access point for the little guys, so to speak.”
Since launching in a private beta test last year, the app has been used to analyze about $2 billion in properties.
Backflip is not targeting or working with individuals who live in the homes, just entrepreneurs looking at them as investments and to sell or rent them to tenants. The investors can be people investing in real estate as a side hustle or ones who have made it a full-time job.
“It’s been very interesting and awesome to watch the evolution of the beta members and really the diversity of different types of people, different backgrounds and different experiences,” Ernst said.
Ernst said for the most part, its members are not competing with homebuyers for low-priced homes. Many of the properties they’re looking at need work and are only getting demand from investors.
“Supply has a fundamental problem. We’ve underbuilt for the last decade-plus as an industry, and we also haven’t done a good job of reinvigorating the existing housing stock,” Ernst said. “There’s an opportunity here to really increase supply, which is where Backflip is very focused.”
Ernst, a Dallas native, lived in New York for more than a decade and has worked as an investment banker, an investor in various businesses and as the co-founder of a real estate startup in the storage space. Before starting Backflip, he was chief operating officer of another Dallas real estate investment company.
His co-founder, Jake Rome, comes from a background of real estate private equity and institutional capital.
“The two of us bring different but deep backgrounds in institutional capital combined with technology and data and business building, and it really helps us think about bringing something that’s truly different, unique and innovative to the market,” Ernst said.
The equity seed round is co-led by Austin-based LiveOak Venture Partners and Vertical Venture Partners, based in the Silicon Valley. Revel Partners, Great Oaks VC and Greg Waldorf — a former board member of Trulia and Zillow — are also participating.
LiveOak founding partner Krishna Srinivasan is joining Backflip’s board of directors alongside Brad Corona, managing director of Vertical Venture Partners.