Cofounders Matt Humphrey and James Herbert at the very beginning of their journey.
Last month, Figure announced it was acquiring Kiavi for $717M. Unless you’re in the house-flipping business, you’ve probably not heard of Kiavi before.
My partner Charles Moldow incubated the business out of Foundation’s SF office and served on the board for 14 years. This was actually Charles’ second time backing cofounder Matt Humphrey. And (entirely unrelated but important to me) cofounder James Herbert was the first friend I made at profro weekend some years ago.
All that is to say, we have some familiarity with Kiavi here at Foundation.
This is a brilliant stroke by Figure. They’ve just quietly acquired themselves a crown jewel. I’m not going to say this is their Instagram or YouTube moment, but I’m not not saying that either.
Figure has talked quite a bit about how strategic Kiavi will be across their whole ecosystem of products. Not much to add there, it’s very cool stuff. What that glossed over though is just how good the meat and potatoes of the Kiavi business actually is.
Kiavi does “residential transition lending,” which are construction or renovation loans that help house flippers purchase and renovate the existing U.S. housing stock. (Somewhat of an aside here, but we’re in a major housing-supply crisis with no end in sight, and no prospects that the new build industrial complex will be able to save us, so this house-flipping sector is a lot more important than you might have realized.)
Kiavi is the combination of a great asset class and a great business:
Lifetime realized loan losses for the company are around 0.50%
75% of originations come from repeat borrowers
These factors and others enable Kiavi’s 7x LTV:CAC and drove it to something well in excess of $100M in adjusted EBITDA in 2025
Pretty good! But that’s not the most interesting part, it’s this:
In 2025, Kiavi reached nearly 10% market share, making it the largest player by a wide margin. The numbers start to get fuzzy from here, but best estimates are that all institutional players combined only get you to 25% market share. That means 75% is still owned by local, “relationship-based” providers.
What’s about to happen here, we’ve seen many times across many segments of the lending universe over the last 30 years. When a national-scale (and usually markedly more tech-native) player emerges, roughly this flywheel starts to spin:
For sure this is a recipe for great profit taking. Usually that’s accompanied by meaningful growth in the underlying market as scale benefits are passed onto customers. At the same time, the local mom-and-pops keep doing the same thing they’ve always done. They will struggle to compete, lose market share, try to consolidate, but mostly will end up dropping off the face of the earth.
This will be a fun thing to watch (sadly now from the cheap seats) but also just incredibly prosperous for Kiavi and now Figure.
On behalf of all of us at Foundation Capital, congratulations to Matt, James, Arvind, Charles, and the whole Kiavi team for building all this latent potential and reaching this exit. And congrats to Mike C. and Michael T. and the Figure team: you have a great eye for beauty.