One of the surest ways to build great startups is simply to remove steps from complex processes. Ev Williams spoke on this topic a few years ago, and it always stuck with me:
“Take a human desire, preferably one that has been around for a really long time…Identify that desire and use modern technology to take out steps.”
— Ev Williams
Spruce is doing exactly that for the title insurance industry. And it fits one of our core themes at Notation — investing in companies that simplify complexity through code and design. We invested in the pre-seed round alongside Collaborative Fund about a year ago, and today Spruce is officially launching the company, now operating in 11 states (soon to be 24), as well as announcing a $4.5M Series A led by Bessemer. If you’re refinancing or buying a home and want an ally in the process, please reach out and get a quote. Or, if you’re interested in helping Spruce on their mission, get in touch or view their open roles.
You might not know much about the title insurance business. I only discovered it a couple years ago when I was buying my first apartment…the bank explained to me it was something I was required to purchase and promptly delivered me the bill for a couple thousand dollars, packaged alongside other overpriced closing costs and fees.
Introducing the company on their blog, Patrick Burns from Spruce explains:
“Last year, Americans took out about 7 million mortgages — either to refinance an existing mortgage or to buy a new home. For each one, the lender required the borrower to buy a title insurance policy. Title insurance does an important job: it protects property rights of real estate owners and lenders.
[However], title companies are far less efficient than they should be...The research, processing, escrow and closing that comprise a title company’s role in ensuring and insuring that a real estate transaction is legally effective are often extremely manual, paper based processes. These “inflated” expenses result in around $15 billion in annual premiums, most of which are retained by the title agents, along with an estimated $5 billion or so in extra fees charged for closing and escrow services.”
We met Patrick about a year ago because we were looking for him. One of our LPs, Zach Aarons, had explained to us how broken the title insurance business is, and so we were on the hunt for someone to fix it.
Patrick has a background in making complicated processes simple — as a product manager at Betterment, both he and his co-founder Andrew saw first hand the power of thoughtfully applying technology with a customer-centric focus onto true domain expertise. The result was a generational improvement in investment access and experience, which left the entire industry playing catchup. When I met Patrick, he saw some of the same opportunities in title insurance, and had become so obsessed with the industry, that he decided to get his title insurance broker’s license in his spare time on nights and weekends. There was never any doubt in our minds that Patrick’s product experience and obsession with the title industry made him the exact right person to tackle this opportunity.
So what exactly is Spruce? Spruce is a technology-focused title and settlement company that makes real-estate transactions fast, frictionless and secure. Spruce dramatically simplifies the process of buying title insurance by offering the first title API for lenders, and the first truly digital closing experience for homebuyers.
Like Ev’s quote above, Spruce has taken out onerous steps from the traditional title insurance process, which means the company can offer their product both cheaper and faster than the incumbents. We’re incredibly excited to be part of the Spruce journey, and thrilled for all the homebuyers that will save countless hours and dollars purchasing title insurance through Spruce.
