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Why NFX Invested In Tomo: The Fintech Startup Improving the Mortgage and Home Buying Process

Pete Flint · @peteflint · Jun 2021

3 Reasons Why NFX Invested In Tomo

Tomo, a fintech startup improving on the mortgage and home buying process, is launching today. Founded by an incredible team of ex-Zillow execs, Tomo is an end-to-end digital mortgage and home-purchasing platform aimed at disrupting the archaic home buying experience.

We invested in Tomo’s $70M seed round. It was NFX’s largest initial investment to date — we have deep conviction on the market and team. The round size reflects the quality of the team and the size of the opportunity ahead.

Founders rarely get an inside look at how investors make decisions. So, for the benefit of Founders everywhere, we’re making public the 3 reasons why we invested in Tomo.

1. Deep Knowledge Within The Team

I’ve known Tomo’s Founders, Greg Schwartz and Carey Armstrong for years. Greg was a very early executive at Zillow and I worked closely with Carey during the Trulia/Zillow merger. I initially fiercely competed with them when they were at Zillow (not for the faint of heart!) and we later worked together as partners and collaborators when I served on the Zillow Board of Directors.

It’s easy to understand how phenomenally talented the team is. Greg and Carey have deep knowledge and a keen understanding of the entire real estate experience and ecosystem, not just financing, which gives them multiple advantages. Rarely do you meet a team so experienced and thoughtful about the entire real estate experience as well as passionate and experienced in company building.

2. A Thesis-Driven Investment

Tomo’s company mission exactly matches our thesis for residential real estate: we aim to partner with companies that are transforming the transaction. As we’ve previously written, the current transaction process is enormously costly (costing tens of thousands of dollars including commission, title costs, and other fees) and is horribly frustrating. This has been exacerbated during Covid-19 as the industry rapidly digitizes and home buying demand reaches unprecedented levels.

The way consumers perceive the role of capital providers (mortgages) and brokers will increasingly blur, clearing a path for Tomo to emerge as a category-defining company with a distinct brand and a differentiated product offering.

3. Rebuilding the Software Stack, Free of Legacy Constraints

Lastly, Tomo is rethinking the entire software stack as they build out a modern fintech company. They are combining a software-first approach with the expertise and oversight that is required with something as important as homeownership.

There has been significant innovation over the last few years in the fintech ecosystem. This innovation combined with changing consumer and industry expectations that everything should be possible with a few touches on your smartphone presents a unique opportunity. We believe that companies with this approach can reinvent existing industries.

This reinvention comes not just from building a breakthrough product experience, but also by continuing to innovate and improve by moving faster, as they are unencumbered by legacy constraints. This plays to the primary advantage of a startup: speed.

A New Wave Of PropTech

Real estate is by far the largest asset class in the world — yet most of its surrounding categories are still in the early stages of tech adoption. At NFX, we see that generational trends and shifts in consumer behavior are starting to create a new wave of PropTech startups. And we believe Tomo will capitalize on this wave.


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