Housing startups test new approaches to increase supply and affordability

Urban.Us, a U.S. venture capital firm targeting the challenges of cities, opened its playbook for investing in housing startups.

“The top 10 home builders made a combined $43 billion in 2015,” Urban.Us co-founder Stonly Baptiste notes in a post on Medium.

A few takeaways: Better housing requires better designs and manufacturing processes. See Manufacton, which helps prefabricated home builders track building components.

Financing remains the biggest barrier to new approaches, as traditional banks haven’t met the demand for mobile and non-constructed and prefab homes. Tumbleweed, a builder of tiny homes, keeps the wheels on so buyers can qualify for alternative loans. Its hotel platform allows owners to tap rental income, increasing their units’ long-term value.

Cities have incentives to boost their affordable housing stock, which helps local businesses attract and retain talent.

The fragmented market, along with tech and financial innovation, Baptiste says, is “encouraging founders to start companies that solve very old problems.”

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