YC, Khosla-backed Atmos Raises $12.5M to Design Custom Dream Homes • TechCrunch

Startup Atmos, an online marketplace that connects homebuyers with builders and developers to design and build custom homes, raised $12.5 million in a Series A funding round led by Khosla Ventures today.

In the year San Francisco-based Atmos, founded in 2018, says its technology allows home buyers to select land, design a home within their budget, and approve the design with 3D technology. It then connects buyers with a “verified developer partner.”

The startup aims to give buyers more options as the country faces a persistent housing shortage and mortgage interest rates have more than doubled from last year. Atmos says it can help developers by providing them with potential buyers. It also says it can help land developers by allowing them to go direct to the consumer.

Existing backers Bedrock, JLL Spark, YC and OpenAI CEO Sam Altman participated along with new investors real estate broker Keller Williams, Duke Angel Network, Bain Capital co-chairman Stephen Pagliuca and Figma CEO and co-founder Dylan Field. The company previously raised nearly $2 million in funding in March 2020. That same year, he participated in Y Combinator’s summer cohort, then raised an additional $4 million led by Khosla.

Atmos CEO and co-founder Nicholas Donahue said, “On demo day, we got a letter of intent from Khosla. ‘Within two weeks, we accepted it.’

Atmos says the technology allows buyers to “see exactly what can be built on any specific site based on size, shape and development requirements.” First, it helps buyers do a survey and soil test and then build a home based on their personal preferences. After the developer is confirmed, construction can begin.

“We’re trying to put the design process more online,” Donahue said. “We also onboard partners and collect specific local information such as zoning requirements and spelling.”

It also ensures that construction does not violate any HOA restrictions before a buyer spends too much time on a project.

The average cost of building a home through Atmos is around $225 per square foot. So for a 1,500 square foot home, it comes out to $337,500. That’s cheap or expensive, depending on what market you’re building it for. Some choices, such as whether a buyer chooses to build a one-story ranch home or a two-story home, can affect cost, Donahue added.

So far, the startup has built six houses and “is working on a few dozen more,” he said. It makes money by charging homebuyers a 5% service fee on construction costs for “due diligence, design and project management.” It also charges a flat fee of $20,000 for builders who need to find, vet and service a client, as well as handle any pre-construction issues.

Eventually, Atmos has its sights set on what it describes as other emerging tech markets like Denver, Austin, Portland and Salt Lake City.

Unlike Hosla’s portfolio company, which raised $70 million earlier this year and describes itself as a “tech-enabled homebuilder,” Donahue says Atmos is more focused on homebuilding.

“We’re more design-oriented, and we’re more focused on the process that someone goes through to create the home,” he told TechCrunch. “My belief is that if it was simpler and less ambiguous, more people would build it, and they had the ability to design a home that was unique to them.”

He believes Atmos’ biggest difference compared to space startups like Welcome Homes is that it offers “more flexibility” and freedom at the design level.

Interestingly, unlike most startups that raise capital, 26-person Atmos doesn’t plan to use the new money to hire in this market, Donahue said. It is focused on building the marketplace.

“You have all these things like builders and developers in a very hot environment … instead of working with a client to build a custom, they end up buying tons of land,” he said. “We saw an opportunity to help them shed some of their overused assets.”

Evan Moore, partner at Khosla Ventures and co-founder of DoorDash, has gained experience in the real estate space by helping the Opendoor team pre-launch to lead the product. He told TechCrunch in an email that in his previous job, he had talked to many families who bought tracts of houses that were “just huge blocks of flats that all looked the same.”

“Many wanted to build a home custom for their needs but didn’t know where to start and couldn’t get a timeline or price certainty,” Moore said. “It was clear to me that if someone could provide a credible, transparent process, more people would build custom homes… It seems clear that in the coming years, someone should be able to find places that can be found in designing functional homes. With those lots by local regulation, and start your build – all online.

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