Author: stacey

For more than 20 years, our investment philosophy has been to serve as lead investors in backing exceptional Texas-based entrepreneurs disrupting massive industries in their first institutional rounds. Applying this philosophy, we have doubled down on leading early-stage investments in companies that have subsequently become industry leaders in the nexus of real estate, technology, and fintech, while also operating under the confines of regulatory frameworks that are relevant across these industries. Our investment in Nada exemplifies the same theme.

Our first investment with this playbook was Opcity (lead referrals), which was followed by Ojo Labs (guided marketplace for real estate leads), then Homeward (power buying for consumers), and recently, Backflip (power buying for investors). Marshaling the insights, networks of great entrepreneurs, and experiences from leading investments in these exceptional companies, we are pleased to announce that we are leading our latest investment in this space – an $8.1M financing round in Dallas-based Nada Finance. Nada extends the vein of fintech meets real estate by providing a platform that enables homeowners to unlock the vast latent value in home equity through a debt-free, equity-share model known as a Home Equity Investment (HEI). Nada sources capital for HEIs from unaccredited retail investors who can invest in shares of a city, thus democratizing real estate investing – these insights form the foundation of the thesis for our investment in Nada.

#1 – The Home Equity Opportunity

The first insight is anchored around our conviction in the size of untapped home equity in the US which recently surged to over $27T at the end of Q1 ‘22. In the fourth quarter of 2021 alone, home equity grew $3.2 trillion compared to the same period in 2020, according to real estate analytics firm CoreLogic. While there will undoubtedly be downward pressures on the rate of growth, and ultimately on the values, of home equity, this is a substantial corpus that many homeowners have the option to unlock cash — without having to sell their homes or take out expensive personal loans. Historically, homeowners could only tap their equity through a home equity loan, a home equity line of credit (HELOC), or a cash-out refinance. However, with rates spiking for the foreseeable future, this has become a much more expensive option to tap into and one that increases the homeowner’s total debt. With Nada’s technology-enabled products, homeowners can access their home equity and also spend in a frictionless fashion using the Nada debit card without the encumbrances associated with adding new debt at high-interest rates.

#2 – Democratizing Real Estate Investing

The second insight is how the company is transforming the way people invest in real estate by providing them access to opportunities that were previously only available to accredited investors. For the first time ever, retail investors can buy and sell shares of a top city, for as little as $250, on the platform by investing in Nada’s “Cityfunds” investment product. This product is an index-like real estate fund providing targeted exposure to a single city’s home equity market. While there has been a growing number of platforms that enable retail investments in real estate, Nada is the first to enable directing these investments to home equity. Accomplishing this in a proprietary regulatory-compliant and SEC-qualified framework is another secret sauce of the company.

#3 – Strong Multidisciplinary Founding team 

Last but not the least, as in any LiveOak investment, the reason for our investment is the two founders – John Green and Mauricio Delgado, who bring a strong combination of specialized skills around mortgage, specialty lending, regulatory compliance, and technology and vision required to address this ambitious endeavor. In a highly capital-efficient fashion, they have already put in place the infrastructure and consummated transactions for over 1,500 users across three Cityfund public offerings and generated a waitlist of over $300M in homeowner equity on their platform. 

In summary, democratizing access to real estate for investors while enabling homeowners to unlock the intrinsic value in home equity using debit cards is a compelling and complex problem that sits at the confluence of several large opportunities. The Nada founders are uniquely qualified to address this challenge, and we at LiveOak are excited to partner with them to help build a successful company!

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We’re delighted to partner with John R Green and Mauricio Delgado and lead the investment in Nada Inc. as the company looks to unlock trillions of homeowners’ equity by democratizing access to real estate investing. Welcome to the LiveOak Venture Partners portfolio!