by Pete Flint (@PeteFlint). Pete is a Managing Partner at NFX, a seed-stage venture firm based in San Francisco.
Industry: PropTech (real estate technology)
What they do: Modus is building novel software for real estate transactions providing title, escrow, and security services to simplify the home closing process.
Round & Size: $12.5M Series A
Co-Investors: Felicis Ventures
In NFX tradition, we want the entire Founder community to benefit from funding announcements so we’re sharing the 3 biggest reasons we invested in Modus. As Founders ourselves who’ve started 10 venture-backed companies, we believe this level of transparency can shed greater light on how VCs see your startup during the pitch process.
Here’s what we saw in Modus…
For most home buyers today, the transaction process of buying a home continues to be complicated and takes place mostly offline.
In the past we’ve written that changing consumer expectations will create a massive and growing opportunity in real estate tech for startups that are able to improve and update the antiquated real estate transaction process.
Solving this is an enormous and complex process, and many startups are taking novel and exciting software-first approaches focused on different segments of the market or different elements of the transaction. Given the size and fragmentation of the US real estate market, we see an opportunity for there to be a number of large and successful customer-focused software companies being built around this broad thesis.
We are excited by and impressed with the Modus approach and how they have focused on simplifying and digitizing title and escrow services and providing essential security. Modus is looking to capitalize on that clear opportunity to help modernize real estate for both consumers and real estate agents.
Title and escrow services represent a complicated and somewhat esoteric part of the real estate industry. While it’s an enormous industry, it’s not what your average tech startup Founder spends their evenings and weekends obsessing about.
The Modus founding team features a unique blend of expertise in real estate with a deep appreciation of the nuances and complexities of this industry, as well as the ability to build modern software and exceptional user experiences. In a short period of time the team has demonstrated their ability to be exceptionally fast learners and are students of all aspects of this product and business. Rapid and constant learning which enables companies to out-learn and then out-execute competitors or incumbents to become a category leader are at the core of all great businesses.
It’s rare to find people that have both top-class technical ability as well as a detailed understanding of this market category, and Modus’s founding team has both.
Ever since we got to know Modus, we have seen how they have not only built a great product in a big market, but also built the foundation of what we think can become a great company. Strong execution in order to rapidly scale usage of a compelling product is what leads to impressive traction. As we emphasized in the fundraising checklist, the number one thing that Series A investors look for is traction. Modus has certainly achieved plenty of that.
Since their launch in July 2018, they’ve grown to 50+ employees and facilitated over $1B in residential purchases. They have captured 3x market share compared to their next closest competitor, despite being a newer company than the competition. We know Modus is just getting started.