Animo Ventures

Auto Added by WPeMatico

Commercial real estate lending startup Lev brings in $30M on a $130M valuation

Commercial real estate has been slow to embrace technology; though it has an addressable financing market of more than $40 billion, putting together a deal is still mostly manual, paper-heavy and complicated.

New York-based Lev is taking on this problem by automating workflows online and gathering hundreds of millions of data points into machine learning software to ensure financing accuracy. To do this, the commercial real estate financing transaction platform raised $30 million to give it a $130 million valuation just two years into its inception.

The latest financing comes four months after the company raised $10 million in seed funding led by NFX. Greenspring led the latest round, with participation from First American Title. Existing investors NFX, Canaan Partners, JLL Spark, Animo Ventures and Ludlow Ventures also joined in to give Lev total investments of more than $34 million, according to Crunchbase data.

Lev founder and CEO Yaakov Zar previously co-founded Boston-based Dispatch, which built tools for home services businesses. It was when he and his wife went through the homebuying process — and their mortgage fell through — that Zar decided to look at real estate financing.

He channeled his frustration into becoming a licensed mortgage loan originator. After relocating to New York, Zar was helping a friend at a nonprofit organization refinance their building and got a firsthand look at what he said was a fragmented commercial real estate mortgage industry.

Companies like Blend are addressing the problem of real estate lending, Zar told TechCrunch, but very few are focusing on commercial real estate, where lending is sensitive to interest rates and total amortization. In addition, property owners have a burden of refinancing every five to 10 years.

“Legacy businesses like JLL, which is an investor, Cushman Wakefield and CBRE work on lending, but they are much more ‘relationship focused’ than tech focused,” Zar said. “We think that it is a necessary part because the deals are so large and complex that you need a relationship for them, but transactions less than $1 billion are pretty straightforward. On experience and product, no one is close to us.”

Initially, Zar and his team wanted to build the “Rocket Mortgage of commercial real estate lending,” but found that to be difficult because real estate brokers are putting together their own pitch books for lenders. Instead, Lev is building a technology platform of more than 5,000 lenders with information on what projects they like to finance. It then analyzes a customer’s portfolio and connects them in minutes with the right lender, taking 1% of the loan amount for each transaction as payment. Lev is also working to be able to close deals online.

Zar wasn’t looking for funding when he was approached by investors, but said he was introduced to some people who liked the company’s growth and trajectory and decided to accept the funding offer.

He intends to use the new funding on product development, with the aim of giving a term sheet in seconds and closing a loan in seven days. Right now it can take a week or two to get the term sheet and 45 to 90 days to close a loan.

The company has about 40 employees currently in its New York headquarters, Miami R&D center, Los Angeles outpost and remotely. Continued investments will be made to expand the team.

Lev grew 10 times in volume in the past year, closing approximately $100 million of loans in 2020. Zar expects to close over $1 billion in 2021.

“Customers come back to us repeatedly, and there are a ton of referrals,” Zar said. “We want to be the platform on which capital market transactions are processed. You need an advantage to network and find great deals. I don’t want to mess with that, but when you find it, bring it to us, we will close it and provide the asset management with the best option to close online and manage the deal from a single platform.”

Meanwhile, Pete Flint, general partner at NFX, told TechCrunch that he got to know the Lev team over the last 18 months, checking in on the company during various stages of the global pandemic, and was impressed at how the company navigated it.

As co-founder of Trulia, he saw firsthand the problems in the real estate industry over search and discovery, but as that problem was being solved, the focus shifted to financing. NFX is also an investor in Tomo and Ribbon, which both focus on residential financing.

Wanting to see what opportunities were on the commercial real estate side, Flint heard Lev’s name come up more and more among brokers and industry insiders.

“As we got to know the Lev team, we recognized that they were the best team out there to solve this problem,” Flint said. “We are also among an amazing group of people complementing the round. The folks that are deep industry insiders will put a helpful lens on strategy and business development opportunities.”

 

Powered by WPeMatico

Meet Mighty, an online platform where kid CEOs run their own storefronts; a “digital lemonade stand”

For kids of a certain age — think 9 to 15 — options for enrichment are somewhat limited to school, sports, and camps, while the ability to make money is largely non-existent.

A new startup called Mighty wants to provide them with a new alternative through a platform it’s building that, like a kind of Shopify for kids, enables younger kids to open their own store online and hopefully learn a bit in the process. In fact, Mighty — led by founders Ben Goldhirsh, who previously founded GOOD magazine, and Dana Mauriello, who spent nearly five years with Etsy and was most recently an advisor to Sidewalk Labs — sees itself as smack dab in the center of fintech, ed tech, and entertainment.

As often happens, the concept derived from the founders’ own experience. In this case, Goldhirsh, who has been living in Costa Rica, began worrying about his two daughters, who attend a small school and he feared might fall behind their stateside peers so began tutoring them after school. He says he was using Khan Academy among other software platforms, but their reaction wasn’t exactly positive.

“They were like, “F*ck you, dad. We just finished school and now you’re going to make us do more school?’”

Unsure of what to do, he encouraged them to sell the bracelets they’d been making online, figuring it would teach them needed math skills, as well as teach them about startup capital, business plans (he made them write one), and marketing. It worked, he says, and as he told friends about this successful “project-based learning effort,” they began to ask if he could help their kids get up and running.

Fast forward and Goldhirsh and Mauriello — who ran a crowdfunding platform that Goldhirsh invested in before she joined Etsy — say they’re now steering a still-in-beta startup that has become home to 3,000 “CEOs” as Mighty calls them.

The interest isn’t surprising. Kids are spending more of their time online than at any point in history. Many of the real-world type businesses that might have once employed young kids are shrinking in size. Aside from babysitting or selling cookies on the corner, it’s also challenging to find a job before high school, given the Department of Labor’s Fair Labor Standards Act, which sets 14 years old as the minimum age for employment. (Even then, many employers worry that their young employees might be more work than is worth it.)

Investor think it’s a pretty solid idea, too. Mighty recently closed on $6.5 million in seed funding led by Animo Ventures, with participation from Maveron, Humbition, Sesame Workshop, Collaborative Fund and NaHCO3, a family office.

Still, building out a platform for kids is tricky. For starters, not a lot of 11-year-olds have the tenacity required to sustain their own business over time. While Goldhirsh likens the business to a “21st century lemonade stand,” running a business that doesn’t dissolve at the end of the afternoon is a very different proposition.

Goldhirsh acknowledges that no kid wants to hear they have to “grind” on their business or to follow a certain trajectory, and he says that Mighty is certainly seeing kids who show up for a weekend to make some money. Still, he insists, many others have an undeniably entrepreneurial spirit and says they tend to stick around.  In fact, says Goldhirsh, the company — aided by its new seed funding — has much to do in order to keep its hungriest young CEOs happy.

Many are frustrated, for example, that they currently can’t sell their own homemade items through Mighty. Instead, they are invited to sell items like hats, totes, and stickers that they customize and which are made by Mighty’s current manufacturing partner, Printful, which then ships out the item to the end customer. (The Mighty CEO gets a percentage of the sale, as does Mighty.)

They can also sell items made by global artisans through a partnership that Mighty has struck with Novica, an impact marketplace that also sells through National Geographic.

The idea was to introduce as little friction into the process as possible at the outset, but “our customers are pissed — they want more from us,” says Goldhirsh, explaining that Mighty fully intends to one day enable its smaller entrepreneurs to sell their own items, as well as services (think lawn care), which the platform also does not support currently.

As for how it makes money, Mighty plans to layer in subscription services eventually, as well as collect transaction-based revenue.

It’s intriguing, on the whole, though the startup could need to fend off established players like Shopify to should it begin to gain traction.

It’s also conceivable that parents — if not children’s advocates —  could push back on what Mighty is trying to do. Entrepreneurship can be alternately exhilarating and demoralizing, after all; it’s a roller coaster some might not want kids to ride from such a young age.

Mauriello insists they haven’t had that kind of feedback to date. For one thing, she says, Mighty recently launched an online community where its young CEOs can encourage one another and trade sales tips, and she says they are actively engaging there.

She also argues that, like sports or learning a musical instrument, there are lessons to be learned by creating a store on Mighty. Storytelling and how to sell are among them, but as critically, she says, the company’s young customers are learning that “you can fail and pick yourself back up and try again.”

Adds Goldhirsch, “There are definitely kids who are like, ‘Oh, this is harder than I thought it was going to be. I can’t just launch the site and watch money roll in.’ But I think they like the fact that the success they are seeing they are earning, because we’re not doing it for them.”

Powered by WPeMatico