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Merchant commerce platform <keyword id="1552189" type="COMPANY" weightage="20" keywordseo="Pine-Labs">Pine Labs</keyword> on Monday said it has completed a new round of financing from investors including Baron Capital Group, Duro Capital, <keyword id="4699572" type="COMPANY" weightage="20" keywordseo="marshall-wace">Marshall Wace</keyword>, Moore Strategic Ventures, and <keyword id="252562" type="COMPANY" weightage="20" keywordseo="Ward-Ferry-Management">Ward Ferry Management</keyword>. Existing investors Temasek, Lone Pine Capital, and Sunley House Capital also participated in this <keyword id="6357455" type="UNKNOWN" weightage="20" keywordseo="Funding">funding</keyword> round, a statement said. "We raised USD 285 million. We want to thank Puri Kaaynath for supporting and backing us. Our teams, families, customers, and investors," Pine Labs CEO B Amrish Rau said in a LinkedIn post. This translates to about ₹2089 crore. In December last year, Pine Labs had announced raising funding from Lone Pine Capital, valuing it at over USD 2 billion (about ₹14,700 crore). In January 2020, <keyword id="6368201" type="COMPANY" weightage="20" keywordseo="mastercard">Mastercard</keyword> had invested in the company, placing the <keyword id="2461546" type="COMPANY" weightage="20" keywordseo="FinTech">fintech</keyword> firm in the <keyword id="3009432" type="COMPANY" weightage="20" keywordseo="unicorn-club">unicorn club</keyword> (companies with a valuation of USD 1 billion). Incorporated in Singapore, Pine Labs' key investors include Sequoia India, Actis Capital, Temasek, PayPal, and Mastercard. "In this significantly oversubscribed round, in addition to primary proceeds, Pine Labs enabled secondary transactions for its founder, employees, and early shareholders as it is already a well-financed company with a strong balance sheet and has been EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) profitable for several years," a statement said. Pine Labs currently serves more than 1.5 lakh merchants across Asia and the Middle East. Its payment acceptance and merchant commerce solutions including enterprise automation systems such as inventory management and customer relationship management. Its stored value platform includes issuing, processing, and distributing digital gift cards for corporate customers around the world. Pine Labs had recently launched its popular Buy Now, Pay Later proposition in Malaysia and plans to take its integrated Pay Later installment solution to newer markets in Southeast Asia. Last month, Pine Labs had also announced the acquisition of Fave, a Southeast Asian consumer fintech platform. "This is an exciting phase in our journey as we enter newer markets. We excel in enterprise merchant payments and now want to scale new frontiers in the online space as well, at the same time continue to power the credit and commerce needs of our offline merchant partners," Rau said in a statement. SEE ALSO: <a href="https://www.businessinsider.in/tech/apps/news/battlegrounds-mobile-india-pre-registrations-to-begin-on-may-18/articleshow/82702403.cms">PUBG Mobile: Battlegrounds Mobile India pre-registrations to begin on May 18 – rewards, maps and more</a> <a href="https://www.businessinsider.in/business/startups/news/ratan-tata-backed-moglix-is-the-13th-unicorn-from-india-this-year/articleshow/82702143.cms">Ratan Tata-backed Moglix is the 13th unicorn from India this year</a> <a href="https://www.businessinsider.in/cryptocurrency/news/elon-musk-hints-that-tesla-may-dump-its-billion-dollar-bitcoin-investment/articleshow/82699553.cms">Elon Musk hints that Tesla may dump its billion dollar Bitcoin investment — here’s why his tweets have so much power</a>

Sequoia and PayPal-backed Pine Labs completes a first close of $285 million funding round from new investors

<keyword id="8901041" type="UNKNOWN" weightage="20" keywordseo="FamPay">FamPay</keyword>, a <keyword id="2461546" type="COMPANY" weightage="20" keywordseo="FinTech">fintech</keyword> startup focussed on teenagers, on Wednesday said it has raised USD 38 million (about ₹278.4 crore) in funding, led by Elevation Capital and existing investor <keyword id="136147" type="COMPANY" weightage="20" keywordseo="Sequoia-Capital-India">Sequoia Capital India</keyword>. Other early investors, Venture Highway, Y Combinator, Global Founders Capital and new Global Investors like General Catalyst, Rocketship VC, and <keyword id="2779666" type="PERSON" weightage="20" keywordseo="Greenoaks-Capital">Greenoaks Capital</keyword> also participated in the Series A round, a statement said. FamPay will use the latest round of funding to build a leadership team to further fuel growth, it added. FamPay makes it convenient for teenagers to make online and offline payments through FamPay app as well as FamCard. In addition to payment products, FamPay also offers gamified savings experiences. "FamPay is creating a market segment that a lot of brands don't focus on today. It's their (teenage users) first step at being responsible with money, their first step into adulthood. We plan to stay with them from this first step throughout their financial journey by evolving the product as they grow," Kush Taneja, co-founder of FamPay, said. The company has crossed 2 million registered users within 8 months of its launch and has been averaging 100 per cent month-on-month growth. In March 2020, the company announced raising USD 4.7 million in seed funding from Y Combinator, Venture Highway, Sequoia Capital <keyword id="3658" type="LOCATION" weightage="20" keywordseo="India">India</keyword>, and Global Founders Capital, as well as angel investors, Twitch co-founder Kevin Lin, Robinhood co-founder Vladimir Tenev, CRED founder <keyword id="192201" type="PERSON" weightage="20" keywordseo="Kunal-Shah">Kunal Shah</keyword> and <keyword id="1552189" type="COMPANY" weightage="20" keywordseo="Pine-Labs">Pine Labs</keyword> CEO Amrish Rau. Launched in 2020 by Kush Taneja and Sambhav Jain, FamPay is a marketing and distribution partner of IDFC FIRST Bank Prepaid Card. "With around 40 per cent of the Indian population being below 18, every year millions of new teenagers will start using their first smartphone and FamPay envisions becoming their go-to brand," Sambhav Jain, co-founder of FamPay, said. "We are privileged and delighted to partner with Sambhav, Kush and the entire FamPay team as they march ahead in their mission to reimagine banking for teenagers. We have been extremely impressed by FamPay's product innovations, growth trajectory and customer love - all early signs that FamPay is destined to become the destination app for GenZ and gateway for their access to fintech and beyond," said Mridul Arora, Partner, Elevation Capital. India today has a sizable population of adolescents and we believe that catering to this unserved audience with innovative products contextualised to their needs and behaviours will create a very valuable business, Arora added. "It was apparent to us they (FamPay) understood their users and had very nuanced views on how to serve them best. The team is excited to double down in this round and is looking forward to working with them to help build FamPay over the next many years," Shailendra Singh, Managing Director of Sequoia Capital (India) Singapore, said. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/apps/news/twitter-may-now-be-directly-responsible-for-every-single-tweet-in-india/articleshow/83565645.cms">Twitter may now be directly responsible for every single tweet in India</a> <a href="https://www.businessinsider.in/policy/news/china-will-not-buy-iron-copper-aluminum-zinc-and-some-other-commodities-from-foreign-countries/articleshow/83565216.cms">China has decided to take global commodity bulls by their horns ⁠— to protect the profit margins of its small businesses</a>

Teenager-focused payments startup FamPay raises $38 million led by Elevation Capital and Sequoia Capital

Merchant commerce platform <keyword id="1552189" type="COMPANY" weightage="20" keywordseo="Pine-Labs">Pine Labs</keyword> on Tuesday said it has acquired <keyword id="7784572" type="COMPANY" weightage="20" keywordseo="fave">Fave</keyword>, Southeast Asia's fast-growing consumer fintech platform, for over $45 million. Pine Labs said that with this acquisition, the consumers in <keyword id="3658" type="LOCATION" weightage="20" keywordseo="India">India</keyword> will be able to use Fave app later this year to save across 500,000 merchant network points powered by Pine Labs across 3,700 cities. ""Fave helps consumers apply their best rewards, coupons, gift cards and cashbacks on all transactions in a seamless manner. We are excited to partner with them in this journey in South East Asia and India," said B. Amrish Rau, CEO, Pine Labs. Fave founders will lead the overall consumer platform across Asia and hire over 100 new employees. Pine Labs said that Fave's investors will receive an all-cash payout, while founders and key Fave employees will receive both cash and Pine Labs shares. To date, Fave has enabled six million consumers in Southeast Asia to save over $400 million across 40,000 retailers since 2016. The acquisition will help both companies accelerate their growth in the Asia region and unlock massive consumer opportunities across retail, <keyword id="117643" type="COMPANY" weightage="20" keywordseo="FB">F&amp;B</keyword>, fashion, and <keyword id="34523" type="COMPANY" weightage="20" keywordseo="fmcg">FMCG</keyword> markets. "We are confident that the APAC e-payments landscape will continue to achieve exponential growth in the coming decade. Together, we will be stronger, faster and better," said Joel Neoh, <keyword id="170488" type="COMPANY" weightage="20" keywordseo="co-founder">Co-Founder</keyword> and CEO of Fave. Fave currently operates in 35 cities across Malaysia, Singapore, and Indonesia and will arrive in India later this year. SEE ALSO: <a href="https://www.businessinsider.in/finance/news/rbis-g-sap-1-0-is-certainly-a-much-needed-demand-lever-to-support-the-government-borrowing-programme/articleshow/82042416.cms">RBI’s G-SAP 1.0 is certainly a much needed demand lever to support the government borrowing programme</a> <a href="https://www.businessinsider.in/tech/news/elon-musk-owned-internet-service-starlinks-india-entry-under-scrutiny-of-dot-report-suggests/articleshow/82043618.cms">Elon Musk-owned internet service Starlink’s India entry under scrutiny of DoT, report suggests</a> <a href="https://www.businessinsider.in/business/corporates/news/tcs-has-broken-many-records-in-the-last-the-three-months-from-revenue-to-new-deals-to-new-hiring/articleshow/82034522.cms">TCS has broken many records in the last three months — but that isn't good enough for the market</a> <a href="https://www.businessinsider.in/business/news/gautam-adani-and-mukesh-ambani-cumulatively-lost-nearly-7-billion-as-the-markets-plunged/articleshow/82043202.cms">Gautam Adani and Mukesh Ambani cumulatively lost nearly $7 billion as the markets plunged</a>

Pine Labs just spend $45 million to acquire one of Southeast Asia's fastest growing fintech platforms

New Delhi, Mar 3 () Merchant commerce platform Pine Labs on Tuesday said it has appointed Amrish Rau as its chief executive officer.Rau brings fintech, entrepreneurial and corporate experience to his new role as the chief executive officer (CEO) and replaces Vicky Bindra, a statement said.Bindra, after a two-year stint as the CEO, is moving back to San Francisco and will continue to be an advisor to the company supporting strategic initiatives, it added.Rau's startup - Citrus Pay, which was funded by Sequoia India, was acquired by PayU in 2016 in one of the largest fintech acquisitions. He has also served as the managing director for First Data Asia, NCR and Siemens Nixdorf. "I am excited to welcome Amrish to the Pine Labs family. With Amrish's ability to innovate, seek out options with channels and customers we believe Pine Labs can be a true global commerce platform," Pine Labs Executive Chairman Lokvir Kapoor said.Pine Labs has evolved into offering payment acceptance technology, stored value products, in-store consumer credit and other merchant solutions in India, Southeast Asia and the Middle East. It processes payments of USD 30 billion per year and serves about 1.4 lakh merchants across about 4.5 lakh network points.Its key investors are Sequoia India, Actis Capital, Temasek, PayPal, Sofina and Mastercard. SR RUJ

Pine Labs appoints Amrish Rau as CEO

<ul class="summary-list"><li><a target="_blank" class="" href="https://www.businessinsider.com/recession-outlook-job-market-layoffs-unemployment-rate-hiring-economy-2024-7">Economic concerns</a> could lead to layoffs and reduced remote work opportunities in the US.</li><li>A weaker-than-expected jobs report could give cover to CEOs who want to reconsider work policies.</li></ul>What if Saturday was the <a target="_blank" class="" href="https://www.businessinsider.com/4-day-workweek-us-half-day-fridays-pros-and-cons-2024-1">new Friday</a>?It's a troubling thought, to be sure, but a longer workweek is already a reality for some workers. Greece has allowed some industries to move to a <a target="_blank" class="" href="https://www.businessinsider.com/greece-six-day-workweek-productivity-plan-may-not-work-2024-7">48-hour workweek</a> to bump productivity. And South Korean companies, like Samsung, are telling some execs to also <a target="_blank" class="" href="https://www.businessinsider.com/samsung-executives-six-day-work-week-report-2024-4">show up on Saturday</a> or Sunday to help boost the company's business.Now, with economic alarm bells going off in the US, some workers pining for less time on the job might have to keep dreaming.That might not be the worst of it: Employees who'd hoped to stay in or <a target="_blank" class="" href="https://www.businessinsider.com/its-getting-harder-to-find-hybrid-remote-six-figure-job-2024-1">land remote roles</a> might find that harder to pull off. But perhaps the biggest threat to the rank and file is <a target="_blank" class="" href="https://www.businessinsider.com/layoffs-sweeping-us-these-are-companies-making-cuts-2024">layoffs</a>. Jittery CEOs eager to please Wall Street — and their boards — could decide to make the kind of sweeping <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/intel-stock-price-layoffs-weak-guidance-missed-analyst-estimates-semiconductors-2024-8">cuts that Intel recently announced</a>.The weaker-than-expected July jobs report, which is <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-crash-picks-up-recession-fears-carry-trade-unwind-2024-8?_gl=1*3q9341*_ga*MTQ4ODgzMzg4MC4xNzEzNTI5NTU1*_ga_E21CV80ZCZ*MTcyMjg5MDg2MC4yMjEuMC4xNzIyODkwODYxLjU5LjAuMA..">spooking investors</a>, could give some employers cover to step back from everything from a shorter week, remote work, and other measures aimed at improving employee well-being, labor market experts told Business Insider.Peter Cappelli, a professor of management at Wharton Business School, said that there was a perception that some employers had used layoffs as a cudgel to pull workers back into the office. And he said bosses could use the latest headlines about the economy as a fresh reason to get tough with workers — even if business is still doing OK."It's not about the reality as much as the perception," Cappelli told BI.He said that while many workers in recent years gained some leverage, employers have still held most of the power outside a few exceptions like retail workers toward the end of pandemic lockdowns."Employees never really had much of an upper hand in the job market," Cappelli said.Workers could feel even less power if bosses' worries about the economy make them feel less charitable toward their employees.Some big-name businesses report that inflation is pinching consumers to the point that some are cutting back on their lattes and booze.<a target="_blank" href="https://www.businessinsider.com/starbucks-reinvented-cafes-managment-plan-lines-waits-sales-2024-7">Starbucks</a> said last week that <a target="_blank" href="https://www.businessinsider.com/shoppers-spending-less-retailers-brands-cutting-prices-economy-explained-why-2024-7">traffic to its shops</a> has slumped — especially among customers who aren't regulars. CEO Laxman Narasimhan pointed to "a challenging consumer environment." Liquor giant Diageo posted its first slide in annual sales since 2020.It's the kind of thing that could make an employer less inclined to try something new — like a four-day workweek.Yet even without lackluster sales, Cappelli said, the four-day workweek was already unlikely to be widely adopted in the US."I don't think that ever had any chance in the US," he said. But, at the same time, Cappelli also doesn't think companies will push workers to come in on a sixth day. "That's a huge norm break."He noted that the shift in Greece was more focused on letting workers have overtime.<h2 id="fa04bf0f-9a7d-42cc-8a71-b22ae44968e1">CEOs' safe space</h2>Brigid Schulte, director of the Better Life Lab at New America and author of the forthcoming book "Over Work," told BI that when worries about the economy pop up, many leaders want to return to familiar ways of working."In times of uncertainty, particularly leadership wants to go back to sort of what feels like a safer time," she said. "The only irony there is that that way wasn't necessarily better."Schulte said that companies that decide to dump all of their economic problems on workers are short-sighted. She noted that research shows that layoffs do long-term damage to a company. And, Schulte said, longer work hours are associated with lower productivity, more <a target="_blank" class="" href="https://www.businessinsider.com/employee-wellbeing-programs-help-companies-perform-better-and-manage-cost-2024-7">burnout, and presenteeism</a>.Schulte said too often, when the threat of a downturn looms, leaders see their workers as a big cost on their balance sheet."Taking that longer-term view is actually going to be better for people and for your business in the long run," she said.If companies use economic worries to reverse course on efforts like flexible work arrangements or to conduct layoffs, they put their own well-being at risk."You end up really damaging the trust and morale at your organization," Schulte said. "And, really, you're only as good as your people."

Get ready for nasty layoffs and say goodbye to the 4-day workweek

Acouple of years into the COVID-19 pandemic, a California state flag appeared on a front porch near my parents' home in suburban Austin. The whole thing felt a little too on the nose, as if one household was trying to sum up all of the city's recent changes — the tidal wave of coastal dwellers, the skyrocketing home values, the maddening traffic — with a single banner.The flag is gone now, and so is the gold rush. Home prices and asking rents in Austin are down significantly from a year ago. Local Zillow listings are littered with price cuts. Real-estate agents who once doubled as bouncers at crowded open houses are now hiring ice-cream trucks to lure prospective buyers into properties.The sudden shift in Austin's real-estate market can be read in two ways. Look at it through one lens, and it's a cautionary tale in which FOMO-filled buyers irrationally bid up home prices, setting the stage for an inevitable bust. Look at it another way, though, and it's a success story of a growing city: Real-estate developers saw all those millennials and out-of-towners clamoring for a piece of Austin and answered the call, building tens of thousands of new homes in just a few years. The construction boom, combined with spiking mortgage rates, kept prices from spiraling further out of control. In other words, Econ 101 happened.This isn't a bust in the traditional sense — pretty much anyone who owned a home in Austin before 2020 is substantially richer today than they were a few years ago. But as other pandemic Zoomtowns continue to see increases in prices and rents, Austin stands alone in its change of fortune. The reversal has meant short-term pain for homebuyers who bought near the peak, <a target="_blank" href="https://www.businessinsider.com/home-sellers-summer-disappointment-mortgage-rates-house-prices-real-estate-2024-5">disappointed sellers</a> who now expect smaller windfalls, and homebuilders who are eager to offload their inventory. But letting some air out of the bubble will turn out to be a great thing for Austin in the long run. The slowdown, experts told me, is a sign of a healthy market, an example of how cities can dodge a true housing crisis by allowing developers to do what they do best: build, build, build.Housing in Austin has been through so many extreme distortions that nobody really knows what "normal" even means anymore. Long before offices shuttered and remote workers started pining for more space, Austin residents were sounding the alarm on the city's rising costs. New construction practically ground to a halt after the financial crisis in 2008, but as the economy recovered, the city's population exploded. No <a target="_blank" href="https://www.businessinsider.com/2020-census-fastest-growing-and-shrinking-metro-areas-2021-8">major metropolitan area in the US grew faster</a> between 2010 and 2020 than Austin, where the number of residents surged by 33% over the decade. Real-estate developers ramped up construction to meet the demand, but they couldn't get enough shovels in the ground to keep prices in check. The median cost of a house in the Austin metro area grew by 63% during that time, Zillow found, reaching $323,000 at the cusp of the COVID-19 crisis.Then the real boom began. To well-paid workers unmoored from their desks during the pandemic, Austin <a target="_blank" href="https://www.businessinsider.com/moved-from-san-francisco-to-texas-for-work-life-balance-2023-8">looked like paradise</a>: lower taxes, cheaper homes, and a thriving business ecosystem. Big-name tech firms like Oracle, Facebook, and Google endorsed the city, as did "<a target="_blank" href="https://www.businessinsider.com/manosphere-widening-ideological-gap-between-young-men-women-gender-genz-2024-2">manosphere</a>" figureheads such as <a target="_blank" href="https://www.businessinsider.com/elon-musk-austin-joe-rogan-biggest-boom-town-50-years-2021-2">Elon Musk</a> and <a target="_blank" href="https://www.businessinsider.com/celebrities-moved-to-texas-from-california-new-york-reasons-why-2024-8">Joe Rogan</a>, who urged others to follow in their footsteps. Austin was once again the <a target="_blank" href="https://www.austinchamber.com/blog/05-09-2023-migration">fastest-growing large metro</a> from 2020 to 2022, according to the Census Bureau, surging in population by 5.3%, or more than 120,000 people.As people flocked to the city, home prices exploded. I don't need to tell you that Austin got really expensive really fast, but the raw numbers are still stunning: The typical home price rose by nearly 56% in just a couple of years, Zillow found, surpassing $500,000 by the start of 2023. Homebuyers <a target="_blank" href="https://www.businessinsider.com/moving-to-austin-buy-a-home-texas-tech-jobs-2023-10">got swept up in bidding wars</a>, reasoning that even if the price ended up being steep, it would only climb higher if they waited. Things got so crazy that one large-scale builder started accepting bids for homes on its website, sight unseen. "That never happens," Keith Hughes, an Austin-based executive at the housing-research firm Zonda, told me. "It was that kind of frothy."I'd already moved out of Texas by that point, but I worried from afar that my hometown would meet the same fate as San Francisco, the poster child of the <a target="_blank" href="https://www.businessinsider.com/economic-inequality-housing-shortage-causes-2023-1">housing shortage and all its associated woes</a>. I feared that Austin would become known as a playground for the rich, a city where displacement and mind-boggling home prices marred the natural beauty that once made it such a draw. In my hand-wringing, though, I'd overlooked one crucial detail: Texas is better at building homes than almost anywhere else in the country.Austin-area builders immediately raced to meet the new demand, securing permits for about <a target="_blank" href="https://fred.stlouisfed.org/series/AUST448BP1FH">2,600 new single-family homes</a> in April 2021 alone, a 45% jump from the same month in 2019. All told, plans for more than 130,000 new housing units of all kinds were approved from 2020 through 2022. Once the paperwork goes through, it can take anywhere from a few months to a couple of years for homes to hit the market, so for a while, it didn't feel like any relief was on the way. That couldn't have been further from the truth.Consider the following trend: In the spring of 2022, more than 3,000 new listings were hitting the market each month, <a target="_blank" href="https://www.parcllabs.com/">Parcl Labs</a>, a real-estate-analytics company, found. By the following spring, the figure had surpassed 5,000. All told, Austin's housing stock has ballooned by more than 76,000 units since 2020, an 8.34% increase that includes single-family homes, condos, and townhomes. That's to say nothing of the <a target="_blank" href="https://www.businessinsider.com/rent-decline-fall-apartment-housing-market-landlords-tenant-lease-construction-2023-3">roughly 40,000 new rental apartments</a> that also opened their doors during that time. Now compare Austin's building blitz with San Francisco, which has added a measly 14,000 homes over the same period and grew its housing stock by less than 1%."It's pretty amazing when you think about it," Jason Lewris, a cofounder of Parcl Labs, told me. Considering the size of the Austin market, moving the stock of homes by nearly 10% is a colossal feat. "These are huge housing markets," Lewris added. "Austin wasn't small in 2019."Thousands of new homes weren't the only things pumping the brakes on Austin's runaway market. Mortgage rates reached record lows during the thick of the pandemic in 2021, making it easy for homebuyers to stretch their budgets by borrowing a lot of money for cheap. Then in spring 2022, the Federal Reserve started hiking interest rates to bring down inflation, and mortgage rates leaped. In October 2023, the rate for a typical home loan hit a 20-year high, making the prospect of <a target="_blank" href="https://www.businessinsider.com/housing-market-mistake-buyers-sellers-mortgage-rates-time-to-buy-2024-3">buying</a> — <a target="_blank" href="https://www.businessinsider.com/denmark-mortgage-rates-lock-in-effect-home-buying-selling-easier-2024-5">or selling, for that matter</a> — a lot less appealing. More expensive loans forced buyers to consider the possibility of paying several hundred dollars more each month for the same home, and many decided to play the waiting game instead. The result is homes are sitting on the market longer. These days, "there's no sense of urgency," Doreen Sidney, a local real-estate agent, told me. "There's no rush. The home that you saw two weeks ago, it'll still be there."The job market cooled as companies pulled back on hiring or laid off workers in the face of higher borrowing rates. Migration to Austin also slowed considerably. Between July 2022 and July 2023, more people moved out of the city's main county than moved in for the first time in two decades. Some departed for the suburbs or cheaper Texas locales like San Antonio — 20% of new San Antonians in 2022 had <a target="_blank" href="https://www.bizjournals.com/austin/news/2023/09/14/austin-sanantonio-migration-data-2023.html">moved from Austin</a>. Others, including some tech workers from places such as California, decided Austin wasn't all it was cracked up to be and moved on. "Austin is where ambition goes to die," one disappointed founder and angel investor <a target="_blank" href="https://www.businessinsider.com/tech-workers-moved-to-austin-regrets-2023-8">told Business Insider</a> last year.There was no shortage of ambition among Austin's homebuilders, however. Their efforts may have been focused on chasing all the profit that comes with a crush of demand, but they ended up doing what hopeful buyers had been praying for — bringing down home prices. The typical home price in Austin was down almost 4% in July compared with the same month in 2023, according to the Freddie Mac House Price Index, while prices across the US were up more than 4%. On the one hand, a single-digit drop like Austin's "is not a huge number," Sean Kelly-Rand, a Boston lender who works with home developers, told me, adding: "On the other hand, that's massive." Overall, Austin home prices are down more than 14% from the peak in 2022, according to Freddie Mac, and more than 18% according to Zillow.Homeowners and -builders don't like to see price drops — they want to watch their wealth balloon and reap the rewards of a market that's running red hot. But just like a collapse in prices is bad news for everyone, an unsustainable run-up in home values is also unhealthy. Companies don't want to move to a place where workers can't afford to live. Wannabe sellers might choose to stay in homes they've outgrown if they can't find anything else within their budget. Add up <a target="_blank" href="https://www.businessinsider.com/san-francisco-doom-loop-fix-american-city-housing-transit-2023-7">all these problems and you get San Francisco</a>. A crash in home prices would've also been bad news for Austin, sure, but that's not what's going on here. The vast majority of homeowners in Austin are still wealthier than they were before all this craziness, and local homebuilders made plenty of hay while the sun was shining. For that reason, Austin's slowdown isn't a doom signal — it's a dazzling success."It's nice to see the positive developments in Austin," Orphe Divounguy, a senior economist at Zillow, told me. "Austin should be a model for the rest of the country in terms of allowing builders to meet demand."Austin's long-standing advantages were on full display during the building boom: Sun Belt cities in the lower half of the US have traditionally been more permissive of growth, which enabled developers to mobilize when they saw the first signs of Austin's unprecedented spike in home values. And most of the new construction was concentrated in the suburbs, where there was plenty of space to build outward. Not all cities have the luxury of ample space, but they do have the power to cut red tape and make it easier to build more types of housing. When developers can get projects approved more quickly, they're more responsive to buyer demand, which prevents prices from getting out of hand. Relaxing the zoning laws, which tell builders what they can and can't build, allows developers to get creative and add multiple housing units to lots that might have traditionally allowed only single-family homes.Nobody watching the Austin market should be having flashbacks to the Great Recession. The market's cooling is less a disturbing sign of cratering demand and more a hopeful hint that the city can adapt to people's desire to call it home."I think Austin is going to be fine in the medium to long run," Jenny Schuetz, a housing-policy expert at the Brookings Institution, told me. "The fundamentals of Austin's economy are great, and it's going to continue to grow with jobs and population over time." In fact, easing the housing crunch will probably add to Austin's allure, which has always been at least partly predicated on being cheaper than the big cities on the coasts. The next challenge will be to avoid forfeiting this success — homebuilding is prone to cycles of booms and busts, and developers are already pulling back on new construction as they try to get their already-built units off their books. Home prices in Austin may be down year over year today, but it's not like there's a glut of empty homes like there was around the country in 2008. If building in Austin dries up, prices may very well resume their rise.Kelly-Rand, the Boston lender, thought about making inroads in Austin a few years ago when the building renaissance was in full swing. But ultimately, he decided not to — buyers' behavior was too frenzied for his taste, and prices seemed likely to come down when all those homes on the horizon actually got built. Nevertheless, Kelly-Rand told me he's still a believer in the Texas capital."Long term, I think Austin will be in an even better position," Kelly-Rand told me. "I think the right thing is happening in that developers are meeting demand."<a target="_blank" rel="" href="https://www.businessinsider.com/author/james-rodriguez">James Rodriguez</a> is a senior reporter on Business Insider's Discourse team.

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