San Diego, California-based startup Splitero, which is focused on home equity investments (HEI), has raised about $12 million in a Series A funding round to expand its operations.
Fiat Ventures led the investment round of $11.7 million, the parties announced Tuesday. Gemini Ventures, Joint Effects, PBJ Capital, Permit Ventures, Dream Ventures, Goodwater Capital, Spark Growth Ventures, and Oyster Fund participated in the investment round.
According to Splitero CEO Michael Gifford, the company raised capital amid “tremendous growth” — despite the challenging economic environment. The startup formerly operated in California, Colorado and Washington but announced its expansion into Oregon and Utah as well.
Splitero’s business model consists of providing up to $500,000 as a lump sum of cash to homeowners without income and credit score requirements or monthly payments. In exchange, customers give a share of the home’s appreciation to the startup. Clients must retain a stake of at least 20% in their homes.
Homeowners have the option to repurchase the share of the house from Splitero at any time within the 30-year term via a refinance, home sale or cash buyout. Founded by real estate veterans in 2021, Splitero said it has secured more than $1 billion in equity for homeowners.
“Homeowners’ financial needs are constantly evolving, creating a demand for unique and flexible solutions that support them in reaching their goals and achieving financial wellness,” Alex Harris, Fiat Ventures’s general partner, said in a statement.
Home equity products have become more popular due to surging house prices in the U.S. According to Black Knight, homeowners reached $11.5 trillion in tappable equity in the second quarter of 2022, $5 trillion above pre-pandemic levels. Tappable equity is the amount homeowners can borrow against while keeping a 20% stake in their homes.
Numerous mortgage lenders are investing in home equity line of credit (HELOC) products, such as Homepoint, Guaranteed Rate, United Wholesale Mortgage and loanDepot.