The Way Home: Menlo Leads Series B in HomeLight
We first discovered HomeLight about a year ago. The company was experimenting with television advertising on remnant cable inventory, and one of their ads popped up on my TV. The premise of their commercial was simple yet powerful: sell your home faster and at a higher price by being matched with the best real estate agents in your geography. It was a great call to action. It was something that could be explained on a napkin.
I was not in the market to sell a home (I guess, a waste of advertising spend), but the ad grabbed my attention. At the time I was mapping out the residential real estate market, looking for compelling new value propositions. Annually, the market supports $200 billion in transactions per year, $15 billion in agent commissions, and two million agents with a variety of pedigrees and transactional experience. The market is difficult for most consumers to navigate, and the internet incumbents have focused primarily on the buyer and home discovery. HomeLight, using data to solve problems for the seller, specifically agent matching, seemed to be addressing an obvious hole. I was intrigued.
I first met with Drew and Sumant at their San Francisco office in October 2016. I encountered a gritty and analytical management team building a business that was simple to understand but operationally complex. For example, to build a compelling agent search and ranking engine, HomeLight had to source and analyze 30 million transaction data points siloed across the country in dozens of different data repositories. And to build a viable business, the company had to figure out how to economically scale a referral revenue model. Completing referrals required finding and contracting with the best agents, introducing those agents to the best fit perspective home sellers who come in via their search engine, and then seeing to it that those relationships resulted in listings that eventually converted to home sales. Any given transaction could take months to complete. It was an elegant means to monetize—agents are accustomed to paying referral fees—but no free lunch.
But through a lot of testing and iterations, the HomeLight team had figured it out. The company was growing like gangbusters, the economics were compelling, and the flywheel felt like it was accelerating. The team, most importantly, was excited. I left the meeting believing that HomeLight had the potential to become “the” seller advocate on the web and an iconic company in the real estate technology space.
We followed the progress of Drew and Sumant for several quarters, and when the company finally came up for air earlier this year, we were excited for the opportunity to invest. I’m delighted to say that there was a meeting of the minds—no agent, in this instance, was necessary.
Menlo Ventures is proud to be leading the company’s $40 million Series B financing and to be working with a great syndicate of investors, including Oren Zeev, SGVC, Citi Ventures, Bullpen Capital, and Montage Ventures. The company joins Menlo’s digital consumer and burgeoning real estate technology portfolio, which includes companies like Breather, Realtyshares, Betterment, Rover, Poshmark, Uber, and Credit Sesame. We look forward to many great years (and commercials) ahead.