Home services tech startup Porch.com made its debut on the Nasdaq Stock Exchange Thursday morning at a valuation of $523 million.
The software firm, which merged with special purpose acquisition company Proptech Acquisition Corp., opened trading on Thursday at $15 a share trading under the ticker symbol “PRCH.”
In a statement on Wednesday, Porch.com said it will receive $322 million in gross proceeds from the IPO, including $150 million in a PIPE investment from Wellington Management. The merger with PropTech Acquisition Corp, which went public as a SPAC in November 2019 with a $172.5 million, cleared Porch’s debts entirely.
After fees and the paying down of debt, Porch now has about $200 million in capital that can be used to grow the business.
The SPAC route got Porch onto the public market a full year earlier than would have been possible through a traditional IPO, said Matt Ehrichman, Porch’s CEO.
Porch.com, a home services marketplace with partners in insurance, utilities, home inspection and moving, plans to use the cash to pursue acquisitions to seize the opportunity in real estate.
“While our business has been growing very rapidly organically, there are acquisition opportunities that we do want to be able to pursue,” Ehrlichman said in an interview Thursday morning. “Being a public company with with a very strong balance sheet allows us to be able to go and pursue those more quickly.”
Porch, founded in 2013, has had challenges on its journey to becoming a public company.
Its S-4 filing in October showed that the company has lost money every year of operations. Porch lost over $103 million in 2019 and $50 million in 2018. For the first six months of 2020, Porch’s revenue fell to $32 million though its losses also dropped to about $25 million.
The S-4 also found a “material weakness” in its internal control of financial reporting.
Independent auditors found that Porch lacked “sufficient, qualified personnel to prepare and review complex technical accounting issues and effectively design and implement systems and processes that allow for the timely production of accurate financial information in accordance with internal financial reporting timelines to support the current size and complexity (e.g., acquisitions, divestitures and financings) of the Company.”
Porch hired a CFO and Controller in the summer, and brought on additional personnel to oversee finances.
In an interview with HousingWire on Thursday, Ehrlichman said the company was not yet profitable.
Porch’s bread-and-butter is providing software in exchange for access to their partners’ home-buyer clients, whom it tries to package contractor and utility services.
Part of the growth plan involves offering its ERP and CRM software to more companies in key verticals such as home inspection industry and the moving industry, Ehrlichman said. They’ll also focus on the home insurance industry.
“We really feel like this is day one of our second chapter here,” Ehrlichman said. “As a company, we were able to find our way, which is certainly hard to do. From nothing to a public company in seven years, and now we start this next leg of the journey. We do feel like we are uniquely set up to solve this problem, which is to make the home simple. It’s a massive mission and vision but what we’re trying to do is fundamentally change how people take care of their homes.”
