Amidst a surge in real estate activity in Canada’s largest city, a Toronto-based real estate startup that helps its customers purchase and move into new properties before selling their old ones has clinched $100-million in credit financing from major U.S. investors Silicon Valley Bank (SVB) and i80 Group. 

Properly announced the raise early Wednesday morning, with its co-founder and CEO Anshul Ruparell claiming it is the largest-ever raise by a Canadian proptech company.

“This is the biggest investment we have gotten since we started the company, and it will really accelerate our growth and ability to conduct far more property transactions than we’re doing right now,” said Ruparell. 

Properly entered the Canadian market two years ago, offering a commission-based service that allows buyers to purchase their new homes first, before selling their old ones. The company uses an algorithm that determines what the sale price of a home will be, and lends that money to the buyer in advance, who then uses it to purchase a new home while waiting for a mortgage approval.

Properly will then list the buyer’s old home on the market. If a home is sold for more than the price that the firm’s algorithm predicted it would on the open market, , 90 per cent  all of that profit goes to the customer, Ruparell explained. If the home is not sold at all or takes months to sell, Properly will use its pool of credit to purchase the old home altogether, and 90 per cent of that profit will go to the customer.

The company facilitates the entire process, acting as both lender and realtor.

Properly started out in 2018 with just $8.5 million in a capital pool to purchase homes, but the pandemic-related surge in housing demand especially in Toronto, fuelled by low interest rates and an interest in the suburban market, sent the company on the hunt for more cash. 

Properly aims to use this new round of credit to purchase and finance the purchase of homes in Toronto, Ottawa and Calgary, where it first began its operations two years ago. 

Ruparell said that “multiple Canadian banks” approached Properly with a keen interest in lending, but the company chose to go with SVB and i80 because of their familiarity with the proptech space. The company’s previous financing came from a “large Canadian real estate lender,” Ruparell said, though he declined to specify which. 

SVB has been heavily involved in the real estate-tech space for years, and was one of the earlier investors in San Francisco-based unicorn Opendoor, now valued at close to US$5 billion. Companies like Opendoor and Properly are also known as investment buyers, or iBuyers, and have faced some criticism for either collecting too much in commission, or for not offering buyers a fair value on their homes. But the companies insist that their algorithms are sophisticated enough to price homes as accurately as possible in changing market conditions. Venture capital investment in the space, according to SVB’s own data, has increased in the U.S. for 12 years in a row, and stood at over US$7 billion as of 2019. 

Ruparell said Properly’s commission on a buy-sell transaction is five per cent, a real estate standard in Canada. 

“Properly’s role in a transaction is almost akin to that of an insurance company. We will sometimes see homes not selling immediately on the open market, and taking more than 90 days—that’s when we need to make sure we have the available capital to buy the home,” he added. 

The $100-million credit facility was structured as a product called “warehouse financing,” where the company receiving the funds creates a special-purpose vehicle (SPV) which is then used to purchase the homes. It leaves the lenders—in this case SVB and i80 Group—only exposed to the risk of the assets in the SPV, and not to the company’s performance as a whole. 

Properly will not have immediate access to the facility, according to Nick Christian, head of specialty finance at SVB. “All the money isn’t given on Day 1. They have to continue purchasing homes in order to access the facility,” he told The Logic. 

Christian declined to provide specifics on the terms of the deal, in particular how much interest SVB is charging on the loan. “We’ve been seeing innovation in the real estate space in the U.S. for a while, and the Properly team seemed like a good way to make our foray into proptech in Canada,” he added. SVB, according to Christian, lends to “numerous” proptech clients in North America. 

Ruparell declined to disclose whether Properly was profitable or its revenue growth over the last two years. 

“Our service is designed to support customers in both hot and cool markets. In sellers’ markets like Toronto, we enable our customers to act quickly when they find a home they love. In buyers’ markets like Calgary, the primary benefit is that there is no uncertainty as to whether a customers’ home will sell, because the sale is guaranteed with Properly,” he said.

Properly raised $22 million last summer in a Series A round led by New York-based early-stage investor Prudence Holdings, which was split between $12 million in equity and $10 million in debt. Ruparell said neither i80 Group nor SVB have any kind of equity in Properly.

A number of seasoned tech executives are part of Properly’s management team, including Sheldon McCormick, who launched UberX Toronto, and Craig Dunk, the co-creator of BlackBerry Messenger.

Editor’s note: The story has been updated to clarify that Properly’s customers keep all of the proceeds from a sale of the house on the open market. The company initially provided incorrect information.