Would You Invest in the Future of Home Buying?

Plus, Jason Fried on why email (not this email obviously) sucks.

November 12, 2020

Heyyyo,

A quick refresher for those that are new; last week I hit the reset button on my weekly newsletter to do for startup investing what Snacks does for retail investing on Robinhood by featuring a company that I’m taking a hard look at — and, that you too can invest in via equity crowdfunding (if you don't know what that is, click here).

So, if you like what you see here and haven’t already subscribed, please do 👇👇👇

Side note: Zero inbox is a fools errand. It’s stupid. And, a total waste of time. Ironically, while rethinking my newsletter I realized just how much I dislike email. I’ve tried it all, from Airmail to Superhuman; it’s all the same bullshit, lipstick on a pig 🐷

So, I called the only person I know that can actually do something about it, Jason Fried the founder of Basecamp and Hey.com (email’s last bullet) and he explained to me exactly why I (you??) let Gmail and Outlook push us around and allow such misery into our lives. Here’s my podcast with Jason 👉 https://spoti.fi/3nemoES

Now, let’s dig into this week’s deal, shall we!

Register to invest here 👉 https://bit.ly/3oQYp03

Subscribe to my podcast 👉 https://spoti.fi/3kVHU0y

Text me questions about startups or investing here 👉 +1 312-847-4261

Scott

Company Bio

Nada is transforming the complicated and disconnected real estate transaction into a complete homeowner service relationship by integrating realty, lending, insurance and guidance into a single digital solution.

Meet the Founders

Watch my full interview with Nada Co-founder & CEO John Green here 👉 https://bit.ly/2IrBuI0

John Green is Nada's Co-founder and CEO. Prior to this, John led Strategy & Innovation for a top 10 mortgage lender. He served multiple lines of business as a strategy & implementation advisor focused on sales, risk, technology, growth, and go-to-market strategies. — before that he was a rockstar… literally!

Mauricio Delgado is Nada's Co-founder and Chief Product & Strategy Officer. Prior to this, Mauricio spent 5 years leading a vertically integrated auto retail and finance company to more than $300m in revenue. Before that he was a VP at Lehman Brothers — Mauricio was not a rockstar 🎸.

Traction

  • Raised $500K pre-seed capital from successful FinTech investors

  • Backed by The University of Texas' Accelerator

  • Founding team with 10+ years of industry and startup experience

  • Business partnerships with Young Alfred & Aceable Agent

  • Established product-market fit with strong unit economics & scalable growth

Market Opportunity

Nada joins a handful of other startups — NoBroker, Knock — trying to eliminate realtors (and their fees) from the home-buying process, in addition to OpenDoor, the most established startup in this group with more than $1.5 billion in funding.

The competition is fierce, but the market is large. The typical realtor commission on a home sale is 6% (split between the buying and selling brokers). Factor that into every real estate transaction, and you have an enormous opportunity. The real estate sale and brokerage market is estimated to be $163.7 billion this year, and that’s in an economy ravaged by a global pandemic.

Nada will also have to compete with dozens of other real estate platforms — such as startup RealScout, or well-known website RedFin — for home listings, so marketing Nada to consumers as a viable home marketplace will be a challenge.

Perhaps the biggest obstacle Nada will face is one of trust.

When Zillow, the wildly successful real estate platform, launched, it did so with the intent of disintermediating the real estate market, allowing people to buy and sell homes without the friction and costs of using real estate agents.

Zillow discovered people didn’t trust themselves to make such a big decision alone, however. Buying a house is often the biggest financial decision in a person’s life, and people prefer having the reassurance of a realtor when making it. There’s no price (yet) on peace of mind.

Nada’s success is predicated on building that trust with home sellers, which is no small task.

Terms & Takeaway

Invest in Nada here 👉https://bit.ly/3pmMIOP

Security Type: Crowd Safe
Valuation Cap: $12,000,000
Discount: 20%
Investment Goal: $1,070,000
Raised (as of publishing): $440,343
Minimum Investment: $100

Here's what I like: Again, the market here is simply staggering. The founders have a lot of finance experience, and their platform does the one thing nobody else seems to offer — a winning nurture strategy! I guess the prevailing thought has been people’s lives are cyclical and there’s nothing we can do to increase transaction volume once they buy or sell their home. That thought is wrong btw. The difference between why people choose Nada vs whatever the agent says is intent — similar to why people have ditched financial advisors and car dealerships.

Here's what I don't love: There’s a reason Redfin still has some rando agent meet you at your showing — people still love to bullshit away their fears with a stranger. That barrier cannot be overstated. No brokers is still very much unproven. Additionally, how well do you think Nada will be embraced by Agents and people in the space that stand to lose their cut?? Not well, is my guess (which doesn’t really matter if Nada convinces its users they’re better off self-directed). Perhaps more concerning than behavioral trends, is that institutional investors are literally raising more money than any other time in history to chase down the housing market and they’re playing for keeps… so competition is going to be steEEEP!

Who should invest and why: At a $12m value cap Nada is not a bargain deal, 20% discount helps though. Similar companies in the space have commanded even richer terms with a lot less to offer (flooding markets with investor bucks tends to have that affect).

The math here is pretty straightforward. If you give buyers and sellers 6% of the deal back to spend on loans, insurance and helping them refi — all while scooping up fractional fees along the way; there’s an embarrassing amount of money sitting in front of you at the end of the customer life cycle.

But, if it turns out people can’t (won’t) buy and sell their homes without an agent, no amount of services revenue will make up that difference.

If you couldn't tell, I strongly believe people are going to embrace a broker-less experience (soon’ish), especially as home data becomes more reliable. So, for me — and investors like me — who believe investing in necessary, but antiquated markets like real estate is good business; this is a legit investment opportunity. The question is do you have the patience to wait it out? I view Nada as a long-term investment that will require a lot of funding to be successful. But, if it can navigate the next 18-24 months, the potential of a successful outcome for investors is higher than most!

As always, startup investing is super high risk, anything can happen. So, don't invest money you can't afford to toss into a wood chipper... Nada has loads of potential but as they say, potential doesn’t pay dividends... until it does 💰

Invest in Nada here 👉 https://bit.ly/3pmMIOP

Text me with any questions here 📲+1 312-847-4261

Disclaimer: It goes without saying, but this information should not be constituted as financial advice, my investing opinions are my own and all diligence is the responsibility of each individual investor.