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FirstMark Leads Series A Investment in Backflip, a Proptech Startup Transforming the "Fix and Flip" Real Estate Market


Core Concepts
FirstMark has led the Series A investment in Backflip, a proptech startup that is enabling entrepreneurs to revitalize the aging US housing stock by providing them with the tools and capital to succeed in the "fix and flip" real estate market.
Abstract
The article discusses FirstMark's excitement about leading the Series A investment in Backflip, a proptech startup that is transforming the "fix and flip" real estate market. Backflip has reached top-decile growth and a $10 million net revenue run rate, with over 18,000 loyal members. The company aims to become the operating system for managing the $190 billion "fix and flip" transaction volume in the US, as well as a marketplace for all the transactions surrounding this process. The author acknowledges that he was initially skeptical about the "fix and flip" industry, but realized that Backflip is providing a necessary service in transforming the aging housing stock of the US into desirable homes that the next generation of home buyers can afford. The article highlights the significant underinvestment in housing in the US, with over 50% of houses being over 40 years old, a 3 million unit housing shortage, and median home values outpacing median household income by ~2x over the past twenty years. Backflip primarily monetizes through its loan origination, which has had zero losses of principal to date. The company's approach and underwriting processes are designed to achieve investment-grade credit ratings, which should help drive institutional capital markets to support these entrepreneurs. Backflip has enabled its members to realize an average gross profit of $82,000 per property on the platform and has driven members to come back for Backflip projects multiple times per year. The article emphasizes the combination of product craftsmanship, customer empathy, community, and capital markets prowess that Backflip's founders, Josh and Jake, bring to the table. FirstMark is excited to join them on their journey to build a truly generational company and community in the world's most enduring asset class.
Stats
Backflip has over 18,000 loyal members. The "fix and flip" real estate market in the US accounts for over $190 billion in transaction volume. Backflip has enabled its members to realize an average gross profit of $82,000 per property on the platform. Backflip's loan origination has had zero losses of principal to date.
Quotes
"Backflip not only embodies everything that we've written about Real Estate above but has put the promise into action, reaching top decile growth, capital efficiency and already surpassing a $10m net revenue run rate." "Backflip's aspirations are not only to become the operating system for managing that activity but also to be a marketplace for all the transactions surrounding the "fix and flip" process." "Backflip is giving the SMB real estate entrepreneurs who are reinvigorating the US housing supply the tools to succeed in their business."

Deeper Inquiries

How can Backflip's model be expanded to address the broader housing affordability crisis in the US, beyond just the "fix and flip" market?

Backflip can expand its model by diversifying its offerings to include affordable housing development projects, rental property management solutions, and partnerships with affordable housing organizations. By leveraging its platform and community, Backflip can connect with developers and investors interested in creating affordable housing options. Additionally, Backflip can explore innovative financing options, such as impact investing or government grants, to support affordable housing initiatives.

What potential challenges or risks might Backflip face in scaling its operations and maintaining its exceptional loan performance as it grows?

As Backflip scales, potential challenges may include maintaining underwriting standards, managing increased transaction volume, regulatory compliance, and competition in the real estate financing market. Ensuring consistent loan performance while expanding operations requires robust risk management practices, sophisticated technology infrastructure, and a skilled team. Additionally, market fluctuations, economic downturns, and changes in interest rates could impact Backflip's loan portfolio performance.

How might Backflip's platform and services evolve to better support the long-term sustainability and environmental impact of the real estate projects it enables?

To enhance sustainability and environmental impact, Backflip can introduce criteria for green building practices, energy efficiency, and sustainable materials in its project selection process. By promoting eco-friendly development projects, Backflip can attract environmentally conscious investors and developers. Furthermore, Backflip can offer resources and tools to help real estate entrepreneurs incorporate sustainable practices into their projects, such as access to green building certifications, renewable energy financing options, and sustainability consulting services. This approach aligns with the growing demand for sustainable real estate solutions and contributes to a more environmentally responsible industry.
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