Automation for Everyone
Our investment in Magical
If you’ve ever thought about buying a home (or have successfully gone through the grueling process), you’re well aware of the headaches involved.
Just when you think you’ve gotten over the biggest hurdle of actually finding a home, the bid-process kicks off…then you deal with the mortgage, appraisal, inspection…then the waiting period and closing process…or worse, having to hit the reset button and play the tantalizing home-buying game for a second or third time. Adding to this complexity, home supply has dramatically declined over the past several years as all-cash buyers move aggressively into the market.
Well, there’s good news. Ribbon, our latest investment, is bringing change to this complex, convoluted and opaque process. The company is out to transform the real estate transaction experience by delivering certainty, transparency and joy and essentially level the playing field for buyers, sellers and realtors alike.
When we were first introduced to Ribbon, we were initially intrigued by how its platform utilizes technology, intuitive software and access to capital to equip consumers and realtors with the power of a guaranteed home transaction. And as we got to know Shaival Shah, Ribbon’s CEO, and Wei Gan, CTO, through the early stages of the company’s formation, a few things stood out and compelled us to invest.
A chance to work with a world-class team
Following our investment in Roofstock, a single-family rental marketplace, we were excited to find other entrepreneurs with similarly-ambitious visions to affect the real estate landscape. Fortunately, we met Shaival and Jian in our backyard in New York, as they were piecing together plans to create a new financial offering for the multi-billion dollar residential real estate market.
In addition to the breadth of experience the Ribbon team possesses from companies like Managed by Q, Lending Club, and Twitter, we partnered with industry veterans Josh McFarland of Greylock (who we previously backed at TellApart, a Bain Capital Ventures portfolio company) and Peter Flint of NFX (previously CEO and founder of Trulia) to fund and support the Ribbon team. We believe this team has the passion, commitment and experience to make a tremendous impact on how we buy and sell homes.
A massive market that’s ripe for change
The company plays in the $1 Trillion residential real estate market, and total residential real estate transaction-related costs and fees are estimated at over $120 billion annually. Not only is the market massive, but also rapidly evolving as consumers fervently drive innovative solutions forward.
Home-buyers simply deserve (and expect) better
The home-buying process, particularly for first-time buyers, is fraught with complexity. Finding a home and realtor, bidding, and winning an offer is often followed by a 30- to 90-day mortgage approval process that, when unsuccessful, leaves both the home seller and buyer at odds.
While most home-buyers will inevitably face this uphill battle, a sizable portion of the market (~34 percent) makes all-cash offers, thus expediting and mitigating the risk of the process. Sixty-one percent of starter homes — homes meant for first time home buyers — are now all cash, largely driven by investors turning homes into rentals. Moreover, these all-cash buyers have an advantage on “winning” the bid and on the price of the home given the seller is likely to lower their price for speed and certainty of close.
In the last five years alone, over 200,000 homes worth $30 billion dollars have been purchased this way, reducing the available housing supply and making it that much harder for regular buyers to compete. Ribbon is the first company attempting to bring this all-cash advantage and guarantee to the majority of home-buyers who would otherwise be unlikely to pursue an all-cash purchase.
By bringing greater fairness and efficiency to the market, the Ribbon team is making the home-buying process, dare we say it, enjoyable while also making homeownership achievable for a broader span of the population. That’s a mission we’re thrilled to get behind.
Our investment in Magical
AngelList, a popular site for angel investing, recently weighed in with a scout alternative offering that aims to make it easier for passive investors to get into angel-scouted deals. Photo: The Wall Street Journal
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