Tellus, backed by a16z, wants to help people turn their savings into real estate investors • TechCrunch

Crypto is not having a good week as Bitcoin fell below $17,000 – the lowest level in two years. The stock market Continued to post failures. When layoffs abound. Meanwhile, inflation It recently reached a 40-year high.

For those who want a safe place to park their money and get a good amount of interest on the above savings The national average APY is only 0.20%The options are not really many.

Enter Earth. The six-year-old fintech startup claims it can offer people a 3.85% yield 4.5% on their savings accounts for certain U.S. single-family-home loans using the funds.

With mortgage interest rates having more than doubled in the past year, one might think that now is not the best time to be a digital mortgage lender.

But co-founder Rocky Lee believes the company’s unique business model sets it apart from other lenders in the space.

For one, the company has an excellent offering. It targets existing homeowners who want to upgrade to bigger homes without selling their existing home, which makes it difficult to get a loan through traditional mortgage lenders.

If it sounds complicated, that’s fine.

Lee breaks it down by saying, “Home they [Tellus’ borrowers] Buy is not typically the starting point. It’s called the Super Jumbo Loan, designed for people who aren’t ready to take advantage of the mortgage solution they need. And we provide that solution for those categories of people.

So where does the savings come in?

Telus interest rates are two basis points higher than conventional mortgage rates. For example, if loan rates are 7 percent in today’s market, Tellus charges 9 percent — a premium because it says it’s offering to lend money to U.S. single-family lenders “in capital cities” that otherwise wouldn’t be able to. Get such loans. Because it’s using its retail customers’ savings deposits to fund these loans at a 3.85% to 4.5% yield, Tellus makes the money with what it pays in interest and charges its borrowers.

Retail customers can earn daily interest while getting help with things like budgeting and setting financial goals. Tellus says it encourages financial literacy by asking users about financial matters and then rewarding them with higher interest rates. At the same time, the company stated that it is enabling these consumers to invest in real estate with the ability to withdraw their money at any time.

Lee told TechCrunch that Telus uses it, even if the strategy seems risky. “Extremely strict written requirements” and He hasn’t seen any damage yet because most borrowers walk away soon after refinancing their loans for the better.

As of 2016, Tellus has lent more than $80 million with an average loan amount of $2 million. Collaborates with mortgage brokers to find borrowers. And it finds its retail customers through channels like Instagram, TikTok and Google. Since the company is mobile-first, it focuses on smartphone users. Tellus allows anyone in the US to use its savings software. Loans are only made in California because that is where the loan is licensed and affiliated.

Despite a challenging real estate market, the company said its revenue grew 55 percent in the third quarter compared to the second quarter of 2022, according to co-founder Ti Zhu. And earlier this year, it raised $16 million in seed funding and participation in a seed round led by Andreessen Horowitz (a16z). All-Star Investments, Alumni Ventures, Good Capital, Vector Ventures, West Arrow and Westwood Ventures. The co-founders of YouTube, Lim and Sereno Group Real Estate also participated in the financing, which followed a $10 million SAFE.

The remote-first Cupertino, Calif.-based startup is coming out of hiding as it looks to build out its engineering, marketing and product teams, adding to its core workforce of 50. Targeted at SMBs.

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