- Digital closing company Snapdocs has raised a $150 million Series D that values the company north of $1.5 billion.
- The round was led by Tiger Global Management and included many returning investors.
- The pandemic's major acceleration of digital closing has led to frenzied investor interest in the private and public markets.
Snapdocs, a digital residential-real-estate closing company, announced today that the company has raised a $150 million Series D funding that values the company at over $1.5 billion.
The round, which brings the company's total funding up to $260 million, was led by hedge fund-turned-venture-capital-investment firm Tiger Global Management, and included funding from returning investors startup incubator Y Combinator, legendary venture firm Sequoia, and Fidelity's venture arm F-Prime Capital. Joining Tiger as first time investors are "Tiger Cub" venture firm Maverick Ventures, as well as investors Alkeon Capital Management and Wellington Management.
Snapdocs, founded in 2014, creates mortgage-closing software that connects the workflows of lenders, notaries, title and escrow agents, a homebuyer, and more. Contrary to other mortgage tech companies, it doesn't actually lend money, notarize documents or create title insurance itself, but instead creates software to connect those companies that do. The company claims that it now is involved with almost 20% of American real estate transactions, about $60 billion in transactions monthly.
This is the company's second fundraise since the onset of the pandemic, which caused a massive increase in residential real estate transactions and, subsequently, investor interest in digital closing tools. Mortgage lenders that may have had digital closing as their "fourth or fifth priority" were now considering it their "first priority," Aaron King CEO and cofounder of Snapdocs told Insider, accelerating the industry forward by two years and netting the company over 100 new lender clients.
"If I'm right that the industry has accelerated by two years, that means every lender in the country will choose a digital closing platform in the next 24 months," King said.
The company, which makes its money per transaction, was already doing well and not in need of funding to continue operations, but King wanted to prepare for incoming demand. The company raised $60 million in a round announced in October, and then, after outperforming its already-aggressive Q1 targets, decided to raise even more funds.
"The worst thing you can do as a startup is to underinvest before a wave like that," King said.
The company is far from alone in seeing massive increases in demand, as last spring's move to remote work and a wave of new laws allowing digital notary and closing that followed brought more attention to digital closing than ever before.
Better, a direct mortgage lender, and Doma, a company that started as a title provider before expanding to other parts of the home closing process, have both started the process of going public via a SPAC merger. King told Insider that the company is considering going public and has been approached by "five to ten" SPAC investors, but has decided to focus growing their partnerships with lenders and other partners, instead of setting a strict timeline now.
While transaction volume is high now, that eventually will slow down. King said that while the company makes money per transaction, its plan is to grow by acquiring more customers and partners. A slowdown could mean revenue shrinks slightly, but that's only temporary.
"You will feel it, but it only takes a couple of quarters to get back to where you were," King said.
Snapdocs is the latest in a string of proptech and real estate finance investments by powerhouse investors Tiger Global, as Snapdocs joins companies like rent-to-own startup Divvy Homes and security deposit insurtech Rhino.