Boulder, CO  Sept 18, 2022- PropTech innovator Rook announced a $4.1 million capital raise and access to a warehouse credit facility as it looks to grow its “Shared Value Investment” program, helping prospective homebuyers purchase the right home in return for a portion of the equity upside.  In an environment of high house prices and rising interest rates, Rook offers homebuyers the ability to get into the right house, while sharing risk and reward with community-focused investors.  A diverse set of investors provided the capital including LL Funds, First Mile Ventures, Kickstart Fund, Service Provider Capital, and Tango Ventures.  LL Funds participated in the equity and is also providing the warehouse credit facility.

The last decade has seen sharp increases in house prices. Even with the recent slowdown, prices are near historical highs; in some desirable metros, prices are upwards of 10 times the “median income,” rendering homeownership an impossibility.  Seventy percent of Millennials when polled suggest that homeownership is just a dream.  At the same time, rents are increasing across the country at upwards of 50% in some areas, delivering a one-two punch for prospective home-buyers.

“There is a large portion of the population that is entering their prime home ownership years and are facing the daunting reality of buying a home with high-prices and rising interest rates; still, they desire homeownership, the ability to establish community and don’t want to be perma-renters,” said Ed Messman, Rook Co-Founder and CEO.

According to Jim Morrissey, partner at LL Funds,  “Rook offers an exciting, new financing construct for prospective homeowners to buy houses in a shared equity model.  Bringing investors and homebuyers into a symbiotic partnership with shared risk and reward and full life-cycle alignment is the quantum leap we wanted to support.”

Rook’s platform thoughtfully integrates web3 features that seek to engage a new demographic in helping to solve home affordability.  Rook Co-founder and CTO Kevin Cawley said, “We are leveraging the opportunities of Decentralized Finance and applying them to the world’s largest asset class – housing.”

Serene Papenfuss, Principal at Kickstart Fund says, “We’re incredibly excited to partner with Rook because of its clear value proposition to all market participants: it brings diversification to home owners and investors, increases home ownership affordability, and plays to the DeFi ethos.  In a time of soaring house prices and what we believe are sharing economy tailwinds, Rook is needed more than ever.”

Aaron Stachel, partner at First Mile Ventures added, “Home affordability is one of those problems that hits you in the face every day while reading headlines, and it’s only getting worse as mortgage rates rise.  The Rook team has developed an elegant solution to get the next generation of homebuyers into homes they can afford while providing a way for investors to access residential real estate without becoming a landlord.”

Rook will use the proceeds to continue building out its partnerships, expand into new and compelling geographies, and to build an ecosystem of community-focused investors who match the needs of homebuyers.

Rook is an innovative PropTech company focused on widening home ownership and solving home affordability.  Rook’s Shared Value Investment brings homebuyers, investors, and the housing ecosystem into partnership with full life-cycle alignment.

FirstMile Ventures is a seed-stage venture capital firm who commits early in a company’s life and helps them set the pace for future success.  Kickstart Fund is a venture capital fund for early-stage startups in Utah, Colorado, and the Mountain West and we back the most visionary entrepreneurs with capital, community, and expertise for the journey.  LL Funds is focused on investing in specialty consumer finance companies who rely on the Asset Backed Securities marketplace for growth and success.  Their private equity funds provide growth equity to specialty finance companies; their lending funds provide warehouse lines to such companies; and their public market funds invest in ABS securities of all types.

This week we have an interview with Ed Messman and Kevin Cawley of Rook Capital – where traditional real estate finance meets DeFi. For more info please go to … www.rook.capital

Marketing Darwinism:  Ed /Kevin:  Tell us about Rook Capital. Where did the inspiration come from?

For Ed, the inspiration came from two personal real life use cases of having to sell homes prematurely because of lack of access to liquidity.  Then more recently watching the phenomenal rise in housing prices and thinking about the next generation of home buyers getting boxed out from home ownership.  The original idea however has been on Kevin’s mind for a few years.  How can we at once innovate on a mortgage idea without attempting to disrupt what works with mortgages, to provide liquidity to house-poor Americans, and to make real estate appreciation attainable to everyone—these are the questions we feel we’ve answered with Rook.

Marketing Darwinism:  What are the main issues in the Housing Market?

Home affordability (for everyone but particularly for the next generation that is newly entering the workforce and family stage of life).  Access to easy investing in the asset class and/or the simple ability to support a friend, family member or accommodate a unique situation with a home purchase.  Easier access to liquidity for all stakeholders if and when you need it for your largest asset – your home.  The asset class is huge- $45 trillion- but the riches don’t accrue to everyone in a fair manner.

Marketing Darwinism:  Where does innovation come in with regard to these issues?

To fix home affordability we either need to increase supply (which will take years and is multi-pronged in new builds, zoning, supply chain, etc.) or develop new creative financing mechanisms- like a Shared Value Mortgage.  Furthermore, how do we engage the broader community of people to rally around supporting this by giving them a way to help by co-investing together within a fractionalization framework that is easy to understand, trustworthy, and not onerous

Marketing Darwinism:  What is your plan for scale and market ownership?

We will leverage and partner with the existing and entrenched ecosystem of 1.5M real estate agents and 750K mortgage lenders to help them introduce a new option for homebuyers.  By working with the existing ecosystem we align incentives and achieve scale more naturally than trying to completely disrupt or taking a full DTC approach.  We believe very much in scaling through channels and partnerships.

Marketing Darwinism:  Tell us about your individual journeys and how you arrived here?

Ed: I spent the first half of my career in venture finance where I structured financial instruments for high growth tech companies.  I jumped onto the operating side in 2008 where I was involved in software, fintech and data analytics startups.  As a parent of 3 Gen Z kids, I’m watching a new generation embrace new behaviors and mindsets and also face a daunting path to homeownership — which they are redefining what that even means.  The collision of fintech, real estate price acceleration, and DeFI with the behaviors and wants of a new generation has sparked a new mission for us.

Marketing Darwinism:  Parting thoughts?

Owning a home is sacred.  It offers the space for raising a family, for fellowship, for rest and sanctuary.  The issue in front of us and our kids is daunting and will require new creative ways that embrace the new mindsets and behaviors that are already in place.  It will require resilience to innovate in the backdrop of a highly regulated environment.  It will require more than just us…but the community at large…including the brave new world of DeFi.  If there were ever a moment for DeFi to flex it’s might, it is now.