Tomo Mortgage raises $20 million from Progressive and others
The news comes on the heels of Rocket’s acquisition of Redfin — a “power move,” said Tomo’s CEO, an ex-Zillow exec — plus a major equity investment in KW.
Tomo Mortgage, a fast-growing fintech startup co-founded by former Zillow executives, said today that it has raised $20 million from Progressive Insurance and a handful of others.
This Series B financing round pushes the total investment in Tomo to $130 million as the mortgage industry experiences a bump in refinancing by consumers coming to terms with the reality of rates in the ballpark of 7%.
What brought Progressive to the table? "We share a focus on providing great value and competitive rates to home buyers through a digital first experience," CEO and Co-founder Greg Schwartz said. "And Flo plus Tomo sound so good together — FloMo," he added in a nod at Progressive's longtime corporate character.
Other investors include Ribbit Capital, NFX and DST Global Partners.
What makes the timing noteworthy: The Progressive investment in Tomo comes at an interesting time for the industry, with Rocket Mortgage acquiring Redfin and Stone Point Capital taking a major stake in Keller Williams.
Schwartz, who spent 13 years in executive roles at Zillow, told Real Estate News that the Rocket acquisition of Redfin was a "power move" that "creates a vibrant competitor for Zillow and CoStar," adding that the advertising sales teams at Google and the streamers will be "the big winners."
CoStar and Rocket have both shown a willingness to go big — Super Bowl big — with their marketing, and Zillow is no slouch in that arena, though its biggest splashes have come from creative work the dominant company has inspired, like a memorable Saturday Night Live sketch and the social media sensation Zillow Gone Wild.
But it's not a slam dunk, Schwartz said, with "significant" regulatory risk related to RESPA, which prohibits kickbacks to agents (and others) for referrals.
A closer look at Tomo and its plans: Tomo said it will use the additional funds to grow its team (with a focus on Detroit, Seattle and New York City) and build on its AI-powered streamlining of the mortgage sales and underwriting process. The company, which now operates in 31 states, will also be shifting its headquarters from Stamford, Connecticut, to New York City.