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Alternative financing company Knock has secured $10 million from Second Century Ventures, the venture capital arm of the National Association of Realtors, and Foundry Venture Capital.
However, the company isn’t stopping there.
The funds are part of a greater effort to raise a total of $15 million, the remainder of which it’s hoping to secure by extending the opportunity to non-accredited investors via equity crowdfunding platform Wefunder, according to a Feb. 26 press release sent to Inman.
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The public funding company allows users to invest as little as $100 to secure shares in Knock, which is best known for its bridge loan financing that enables sellers to secure a new home before their existing one sells. Knock is a private company, and the press release states it recently “secured over $125 million in new revolving lines of credit to fund Knock Bridge Loans for years to come.”
Sean Black, co-founder and CEO of Knock, said in a statement that the public tranche of this financing round echoes the company’s greater message of “democratizing the home selling experience.”
“We want to further democratize our business by giving our partner agents, loan officers and customers the opportunity to invest in Knock before a potential IPO or acquisition,” Black said. “Through this Wefunder campaign, which we believe is the first of its kind in the real estate space, our stakeholders are able to share in the upside of a company they use every day.”
Knock has see-sawed on branding for the last several years as market conditions have nudged financing entities of all varieties in different directions in a collective effort to wait out a stubborn lull in home sales.
“Knock used the down market to adapt its business model to fill a much-needed gap in the industry,” the press release stated. “The result is the Knock Bridge Loan, an on-demand financing solution to help lenders and agents provide clients more convenience and certainty and to make them more competitive home buyers.”
The loan leverages a homeowner’s current equity to open a range of possibilities from down payments on their next home to home repairs and pre-sale updates. Knock partners with thousands of loan officers and tens of thousands of real estate agents, according to the release.
The Knock Bridge Loan used to be known as the Knock Home Swap, an innovative financing vehicle that helped homesellers move without being dependent on funds from the sale, a common occurrence and reason for derailed transactions.
It also marketed a bridge loan product for pre-market home improvements and, in early 2023, announced the total amount available was increased to $35,000. It was called the Home Prep and Marketability Allowance.
In 2022, Inman reported on Knock’s buy-down plan, which let homebuyers use the equity in their existing home to buy down their mortgage rate or make a bigger down payment on their next home purchase, a response to the beginning of the lingering post-pandemic interest rate jump.
Marketing itself initially as a proptech upon its 2015 launch, the company surged as aspiring homebuyers found themselves capable of making mortgage payments but not cash-rich enough to buy a new home without checking the “contingent upon sale of current residence” clause in a home offer.
Knock’s early success in part led to the industry term power buyer, describing firms providing upfront cash and home purchase plans outside of traditional home lenders. It also worked to certify agents industry-wide on how to sell its Home Swap product.
The company grew with the goal of going public, which Black did with his former company, Trulia. However, Knock stumbled in that effort, resulting in significant layoffs in 2022, despite a massive, simultaneous $220 million cash infusion.
Black is rightly happy about his company’s perseverance throughout such a prolonged drought in overall real estate market activity.
“We’re not only proud that we pushed through, but that we leveraged the market downturn to offer our proprietary Buy Before You Sell solution to all lenders or agents to make their clients more competitive when it comes to buying their dream home,” Black said in the release. “The competitive landscape has been all but eliminated, and we are excited about our growth trajectory.”
Knock operates in 75 markets across the country.
