Why Revolution Growth is Investing in Orchard
Today we are thrilled to announce our investment in Orchard, a company dramatically simplifying the process of buying and selling a home with a modern, digital experience from search to close.
Revolution Growth has long invested in tech-driven companies that are disrupting legacy industries, particularly where there is a distinct opportunity to modernize the customer experience. Orchard fits this mold perfectly with its tech-forward approach to improving the outdated, status quo experience of home buying. Traditionally, homeowners looking to purchase their next home face a stressful dilemma: selling their old property first and moving twice, or making an offer as a contingent buyer and risking not getting their new dream home. Orchard solves this problem by enabling homeowners to buy before they sell, and their proprietary platform provides consumers a “one-stop-shop” for brokerage, title, escrow, financing, and other ancillary services. Orchard’s customer service is also enhanced by their local real estate brokers who are hired full-time as home advisors (vs. the industry standard model of 1099 agents).
E-commerce has certainly found a home in the residential real estate market as over 50 percent of homebuyers begin their home search online and over 90 percent of consumers use the Internet to help find a home. That said, deciding which home to buy and navigating associated complexities is rarely a transactional decision, it’s an emotional one. For the modern consumer, Orchard balances the benefits of technology and automation with the comfort of expert human advice to navigate the home-buying process. We believe this combination is key. Given the magnitude of emotional and financial considerations that come with buying a home, local agents who provide trusted advice and guidance will continue to play a critical role for most customers for the foreseeable future. By embracing the power of personal relationships and providing agents with purpose-built technology, Orchard is delivering both industry leading agent productivity as well as customer NPS.
We also believe that Orchard is well positioned in the years to come despite the economic uncertainties introduced by the COVID-19 pandemic for several reasons. Their “buy before you sell” option provides an element of financial insurance in uncertain times that prevents customers from having to carry two mortgages at once. The ability to move into a new home right away also allows customers to avoid being present in their old home while prospective buyers tour the property, which is especially valuable in a social distancing environment. Lastly, the work from home movement (which we believe will have lasting effects) has placed a new emphasis on traditional home ownership that should continue to support what is already a healthy U.S. housing market.
Revolution has always focused our efforts outside of Silicon Valley to find investment opportunities and support founders in rising cities. While based in NYC, Orchard serves markets we believe are poised for outsized growth including Austin, San Antonio, Dallas, Denver, and Atlanta. These cities have the right fundamentals for Orchard’s model: diverse and growing populations, growing demand and tight supply, and historically lower home price volatility in prior cycles. With this new round of funding, Orchard will be expanding into several new states that share these demographics and have long been on Revolution’s “Rise of the Rest” roadmap. We look forward to partnering with the Orchard team as they help more consumers, in more places buy homes without unnecessary stress.
