Backflip, a real estate platform that provides data tools and financing for small-scale residential real estate investors, will look for more than USD 100m in debt and equity as early as this year, said founder and CEO Josh Ernst.

The Denver-based fintech group offers services that historically only institutional real estate investors have received, he noted. It hopes to grow its product and capital offerings for its members, Ernst said.

He would not specify which portion of the next raise would be equity or debt. Backflip’s USD 35m seed funding round announced in May 2022 included USD 8m in equity and USD 27m in debt.

Most of Backflip's financing comes from private credit sources, Ernst said. Backers for its next round should be traditional venture capitalists or firms that understand how to scale a “category-defining” technology company, he said. Backflip’s model is well suited to address the nation’s shortage of quality, affordable housing, he explained.

The firm is not interested in a majority investor and has turned away sale inquiries from strategics because it believes its company is best suited to take advantage of its market and growth potential independently, he added.  

“The best way to capture [market share] is with outside capitalization and us building the business both organically or through potential acquisitions,” Ernst said.

Backflip plans to use the proceeds from its next round to enhance customer service and provide  more dynamic capital products for residential real estate investors looking to flip homes, he added.

The firm will also invest in product and engineering, sales and marketing while growing its geographic footprint in the 41 states it now serves, as well as Western states like California and Arizona, the CEO said. Backflip also plans to develop adjacent membership offerings based on customers’ needs, Ernst said.

The slowdown in home sales following the Federal Reserve’s series of interest rate hikes in 2022 hasn’t affected Backflip’s growth significantly because most of its customer base — from entrepreneurs to small teams— are committed to the business full time, he explained.

Membership has grown to about 10,000 since its founding in 2021 and demand for its services has not slowed, maintaining a 10% average monthly growth clip that has been higher recently, he said.

Backflip offers members its technology for free and earns revenues from loan originations, Ernst added.

The company expects 3x revenue increases in 2023 and continued growth beyond, he said, declining to discuss company financials.

Acquisitions are not part of its growth strategy in the near term, but Backflip would consider a bolt-on with lots of synergies in product offering, technology and culture, he noted.

The company announced 29 June its acquisition of Refinably, an Austin-based startup that streamlines employee work efficiencies. The firm’s products, scaling plans and team aligned well with Backflip’s, Ernst said.

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