Pete Flint knows a thing or two about real estate. He helped launch Trulia and later sold the real estate data platform to Zillow for $2.5 billion in 2015. That’s why it’s worth a look at his latest investment.
Flint, now a managing partner at Bay Area firm NFX, co-led a $12.5 million round for Modus, a Seattle startup taking on real estate incumbents by automating much of the work that’s done manually in the title and escrow phase of closing on a home.
Flint told GeekWire he was excited about Modus for three reasons. “They are building a company and software to modernize the broken real estate transaction process; they are a rare founding team with a unique blend of expertise and the ability to attract additional top talent; and they have significant customer demand and executed extremely well,” he said, expanding on those thoughts in a blog post.
Modus CEO Alex Day and Chairman Jai Sim previously worked together at Seattle lunch delivery startup Peach. The company’s other co-founder, Abbas Guvenilir, spent nearly six years at ServiceNow before teaming up with Day and Sim.
The founders tested their idea at a Madrona Venture Labs hackathon in Seattle. After winning first place, they decided to quit their jobs and officially launch the company in July 2018.
Modus has grown to 50-plus employees and facilitated more than $1 billion in residential purchases. It works with hundreds of agents in Washington state and will expand nationwide next year. The company expects to quadruple its headcount in 2020.
While Modus is initially focused on title and escrow, it is developing products and services “that empower the real estate agent and consumers in various ways, which is our secret sauce,” Day told GeekWire. He said the company is involved with customers before a home is even listed on the market.
Modus finds itself in a crowded industry of tech companies trying to transform how houses are bought and sold. Just in the escrow part of the transaction alone, Modus faces competition from fellow Seattle startup JetClosing — which raised $20 million last year — along with others across the nation. Funding to U.S. real estate tech startups is expected to exceed $4 billion in 2019, according to CBInsights.
“While these newer and older companies are often categorized as our competitors, we actually only view them as competitive in the initial phase of our vision at Modus,” Day said. “Similar to how Barnes & Nobles was a competitor to Amazon when they both sold books, we are starting on a similar playing field, but our greater vision is to become the operating system that empowers and serves all parties involved in real estate transactions.”
Seattle is also home to real estate giants Redfin and Zillow, which are investing heavily in the “iBuyer” model that lets customers quickly buy or sell a home. Day said he has “tremendous respect” for the two companies.
“We obsess over improving all aspects of home-closing, where iBuyers are currently focused on the buying/selling process,” Day said. “We are also focused on building for different channels. Modus wants to empower real estate agents and their clients, while other companies are now shifting their focus away from real estate agents to purely serving the consumer.”
Without disclosing numbers, Modus claims to have 3X the market share of its closest competitors.
The company makes money by charging a fee for its closing services. It is not profitable.
Other investors in Modus include Felicis Ventures, which co-led the $12.5 million round; Liquid 2 Ventures; Mucker Capital; Hustle Fund; 500 Startups; Rambleside; and Cascadia Ventures.
The company has now raised $14 million to date, and it is anticipating another major funding round next year.
Modus is one of several real estate startups in Seattle. Others include Knock, Flyhomes, Pro.com, Porch, Remarkably, MoxiWorks, IMPREV, and Faira.