Serial entrepreneur Karl Jacob has attempted to tackle many industries in his career, from social networks to cybersecurity. When a friend asked Facebook’s repeated founder and former strategic advisor if he could help him with his mortgage bank, he said “sure”. He didn’t know what he was getting into. After spending some time in the company’s call center, he realized how broken the system was. Jacob witnessed agents repeatedly asking customers to submit financial information that employees could easily access themselves, and then suggest loans that would make the most profit even if they weren’t the best choice for the consumer. Jacob quickly realized what his next company would be.
“What if we try to modernize not just the technology stack but the mortgage process as well?” Jacob remembers thinking. “How do we know more about this person we want to lend money to so we can lead them as well as we can?” The resulting company is LoanSnap. Launched in 2018, the home mortgage platform aims to provide loans that improve the financial future of the underlying consumer. The startup, which saw strong demand, has just started a new round of funding, as originally in the Midas touch Newsletter.
True Ventures led LoanSnap’s $ 30 million Series B round, which included venture companies like Baseline Ventures, The Virgin Group, and Mantis VC, as well as individuals like former NFL quarterback Joe Montana, the LinkedIn Co-founder Reid Hoffman and Zynga founder Mark Pincus attended. This new influx, which brings the startup’s funding to a total of $ 64 million, will help expand its services in other areas. “There are tons of other financial products that we look at,” he adds. “Especially those who tend to take advantage of consumers where they shouldn’t.”
LoanSnap isn’t the only startup trying to hit the mortgage industry. But Jacob says his company is different. Not only does LoanSnap try to get the process online or speed it up – even though the software tries to close loans within 15 days – but it hopes to put the consumer in a better financial position than when it started. Users provide LoanSnap with basic information, such as: B. the last four digits of your social security number. The AI system scans their financial information and shows users where they are losing money, e.g. B. Student loan interest or credit card debt. Then a “Smart” is recommended. Loan that aggregates all of these payments to give users the opportunity to improve their financial health by paying their monthly mortgage payment. “Our approach focuses on showing [consumers] Specifically, how much they lose each month and then use an AI machine that has a goal to optimize that person’s financial system, ”says Jacob.
The startup’s services are currently available in 21 states. LoanSnap produces the loans itself and is not an intermediary or marketplace for other insurers. Jacob says keeping the entire process within the company allows for a faster approval deadline. The company currently provides mortgage, refinance, and home equity loans. According to Jacob, LoanSnap saved its users $ 35 million last year by moving their payments to a smart loan and $ 16 million in 2021. The company expects to be profitable by the end of this year.
The startup is trying to enter the real estate market at a time when activity is booming. The National Association of Brokers show that in March 2021, after months of steady growth, home sales rose another 12% year over year, leading to a plethora of activity in the mortgage sector. Despite the recent surge in growth, the mortgage industry remains fragmented. Quicken Loans holds most of the market with a bare loan 5% Market share as of 2019 leaving the door open for players like LoanSnap to benefit from the dissolution.