Lower, an Ohio-based real estate finance platform, today announced it has raised $ 100 million in a Series A funding round led by Accel.
This cycle is remarkable for a number of reasons. First of all, it’s a great A series even by today’s standards. The funding also marks Lower’s first round of external funding, previously initiated, in its seven-year history. Lower is also something quite rare these days in the startup world: profitable. Silicon Valley-based Accel has always backed profitable, seeded businesses, having also led major Series A rounds for companies like 1Password, Atlassian, Qualtrics, Webflow, Tenable and Galileo (which were later acquired by SoFi) .
In fact, Galileo founder Clay Wilkes introduced the venture capital firm to Dan Snyder, founder and CEO of Lower. The two companies have a few things in common besides being profitable: they were both started for years before taking institutional capital and both are headquartered outside of Silicon Valley.
“We were immediately intrigued because Ohio-based Lower echoed both of these themes,” said John Locke, Partner of Accel, who led the company’s investment in Lower and serves on the board of directors. of the company as part of the investment. “Like Galileo, Lower will be one of the most successful seeded fintech companies in the world. The combination of a business built in a non-traditional part of the world and a bootstrapped business reminds us [other] companies with which we have partnered for a large A series.
There were other anonymous participants on the tour, but Accel provided the “majority” of the investment, according to Lower.
Snyder co-founded Lower in 2014 with the goal of simplifying the home buying process for consumers. The company launched with Homeside, its retail brand that Snyder describes as “a technology leveraged retail mortgage bank” that works with realtors and builders, among others. In 2018, the company launched the website for Lower, its direct-to-consumer digital loan brand with a mission to make its platform a one-stop-shop where consumers can go online to save for a home, get, or refinance. a mortgage and get insurance in its market. This year, she launched the Lower mobile app with a savings account.
Over the years, Lower has funded billions of dollars in loans and achieved an impressive turnover of $ 300 million in 2020 after doubling its income every year, according to Snyder.
“Our story is perhaps a bit atypical of today’s fintech companies,” he told TechCrunch. “From the start of the business, we thought we wanted to operate it profitably. This has been one of our pillars, so that’s what we did. Also, we all grew up in the mortgage business, so we saw first-hand the size of the market, but also how broken it was, so we wanted to change it.
By launching the digital direct-to-consumer loan brand, the company was working to make the home buying process more “digital, transparent and easier for consumers to access, ”said Snyder.
At the same time, the company did not want to lose human contact.
“We have tried to design the flow of the app so that you can go as far as possible in the app, but if you want to talk or chat with someone at any time, we’re available.” , Snyder added. .
The typical Lower customer is Millennials and now Gen Z aspiring to own their first home, according to Snyder.
“They might think, ‘OK I might be living in an apartment now, but in the next few years I’m going to meet someone and / or have a child and want to unlock the investment of a house.’ “He told TechCrunch.” And we’ll help them on that journey. “
The new application recently launched by Lower offers a deposit account called “HomeFund”. The FDIC-insured, interest-bearing deposit account offers an annual percentage return of 0.75% and is designed to help consumers save for a home with a “dollar-for-dollar reward” up to. first $ 1,000 saved, Snyder said.
Lower works with more than 35 major insurers nationwide, including Nationwide, Liberty Mutual, and Allstate. It has over 1,600 employees, about half of whom are based in the home state of Lower. This is an increase from around 650 employees in June 2020.
Going forward, the company plans to add more services and has an “aggressive roadmap” to add new functionality to its platform. Today, for example, Lower sells primarily to Fannie Mae and Freddie Mac. And although he handles the majority of his loans, like many large lenders, he uses a subcontractor. That will change in early 2022, however, when Lower intends to launch its own native service platform.
And while the company intends to continue to operate profitably, Snyder said he and his co-founders “believe the time has come to gain stakes.”
“We want to become a global brand, raise funds and gain market share,” he added. “We will continue to double our product offering and develop our capabilities. We are fintech’s best kept secret and plan to change that with smart branding, advertising and sponsorship. “
And finally, Lower is considering government procurement as part of its long-term roadmap.
“At the end of the day, we know we can build a great public company,” Snyder told TechCrunch. “We’re big on being a public company right now, but we’re going to keep our heads down and we’re going to keep building for the next few years and then I think we can be able to be a solid public company.
Locke d’Accel emphasizes that in the United States, mortgages and home loans are among the largest financial services markets, and they have been primarily managed by large banks.
“For most consumers, getting a mortgage from these banks continues to be too complex and slow a process,” Locke told TechCrunch. “We believe that by providing consumers with a great mobile experience, Lower will gain stakes in incumbent banks, in the same way as companies like Monzo in banking or Venmo in payments or Trade Republic and Robinhood in retail. actions. “