Home-Selling Startup Orchard Hires New CFO Ahead of Potential IPO


Home-selling startup Orchard hired a new chief financial officer to help prepare the company for a potential listing on the public markets amid a hot U.S. real-estate market.

Patrick McClymont,

the former CFO of movie-theater chain

IMAX Corp.

and art auction house Sotheby’s, joined New York-based Orchard in May, the company said earlier this week. He succeeds Sean Roberts, who was appointed to the role of chief operating officer after serving as Orchard’s finance chief for about three years.

Orchard, which operates in Texas, Colorado, North Carolina, Maryland, Virginia and Georgia, is one of several companies trying to make the process of finding and buying a home easier. Other firms in this space include Knockaway Inc., known as Knock, and publicly traded companies such as

Zillow Group Inc.

Orchard’s CFO change comes as low interest rates and tight supply are pushing up house prices across the country. Median existing home prices rose 19% in April from a year earlier, to $341,600, according to the National Association of Realtors. The organization on Wednesday cited a shortage of 5.5 million homes as a contributor to the surge in prices.

Mr. McClymont will be tasked with laying the groundwork for a potential public listing in the coming year, executives said. Orchard, which was founded in 2017, has so far raised about $148 million in equity from venture firms including FirstMark Capital and Revolution Growth.

Orchard is in the early stages of its preparations to go public and hasn’t decided on a route or timing, Chief Executive Officer Court Cunningham said. The firm expects to raise additional funds from venture investors before going public, Mr. Cunningham said. He declined to provide a target amount of additional venture funding Orchard expects to raise before pursuing an IPO.

Mr. McClymont’s priorities in the new role include building out the firm’s reporting capabilities, which could involve hiring accounting staff, he said. “It’s really just those mechanical functions that you need as a public company,” Mr. McClymont said. Orchard currently has 470 employees, 16 of whom work in finance.

Orchard gives qualified customers the ability to make cash offers to sellers, which often helps them close on a deal, according to the company. It provides the capital that customers need to buy a new home and oversees the sale of the customer’s previous home. Once it sells, the customer uses the proceeds of the transaction to purchase the new home from Orchard, which earns money by charging transaction fees. If the old home doesn’t sell after 120 days, the customer has the option to sell it to Orchard at a predetermined price. The company said it has completed billions of dollars in gross transaction volume to date and that almost all of its customers have sold their homes “for top dollar on the market.”

“Being that cash buyer is really, really valuable in a tight market,” Mr. Cunningham said, noting that sellers typically prefer cash offers.

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Orchard uses revolving lines of credit to provide customers with the capital they need for their new homes. The firm has credit lines with a few hundred million dollars of available capacity with several money-center banks, according to Mr. Cunningham. He declined to comment on the firm’s financial performance.

Orchard has previously faced skepticism about its business model, which is tied to the health of the housing market. Some investors opted out of a funding round last year, as new home sales declined early on during the pandemic.

Rick Heitzmann,

an Orchard investor and founder and partner at venture firm FirstMark Capital, said customers’ decisions to buy a home typically have more to do with changes in people’s lives, such as getting married, having a baby or sending children to college than macroeconomic conditions.

Mr. Heitzmann, who is on Orchard’s board and has invested about $24 million, said hiring Mr. McClymont, who has previously served as a public company CFO, is a step forward in preparing the firm to go public. “He understands what has to be done,” Mr. Heitzmann said.

Write to Kristin Broughton at Kristin.Broughton@wsj.com

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