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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.
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“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.
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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.
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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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