Andrew Wang’s Valon returns to the Fintech 50 for its third year as one of two in the real estate category.
illustration by stephanie cui for forbes; photo by valon
Sustained high interest rates are continuing to hurt home sales, mortgage refinancing and commercial real estate values, creating a daunting environment for fintech startups aiming to shake up the industry.
The effects of the Federal Reserve’s dramatic interest rate hikes, which began in March 2022, can be seen clearly in both real estate activity and our 2024 Fintech 50 list. In 2023, home sales fell to the lowest level in nearly 30 years, according to the National Association of Realtors, while mortgage refinancing applications are down 88% from the so-called “ReFi boom” in 2020.
Meanwhile, the number of real estate honorees on the list fell to just two in 2023 from five in 2022, as an online mortgage marketplace and two services that enabled home buying (one by renters and one by investors) dropped from the list. Now, one of the 2023 survivors is gone. Longtime list member Cadre, a platform that allowed ordinary folks to invest in commercial real estate, was acquired by Yieldstreet at the end of 2023 for a reported $100 million–a fraction of the $800 million it was once valued at.
The sole survivor from last year is a purer technology play: cloud-based mortgage servicing platform Valon. It’s hitting its stride with its revenue ballooning to $30 million in 2023 from only $5 million the year before.
Plus, there’s one real estate newcomer on the list: Groundfloor Finance has seen steady growth since its founding 11 years ago. The company packages loans to residential real estate developers then allows retail investors with as little as $100 the opportunity to invest. Most of its $10 million in external funding comes from the platform’s own users–every year it offers existing shareholders the opportunity to buy more stock and every other year holds a public raise when new investors can join. In the past year, the company has added roughly 40,000 to its customer base.
Here are the two real estate companies that made Fintech 50 2024:
Groundfloor Finance
Packages loans to residential real estate developers and then allows ordinary folks with as little $100 to invest, to buy real estate notes online as an alternative to real estate investment trusts or mutual funds. In October 2023, Groundfloor launched a new product which spreads users’ dollars across all investment opportunities on the platform to create a diversified portfolio across 50-100 projects. The company makes its money charging origination fees, closing costs and application fees to its real estate developer borrowers and in 2023 brought in $26.7 million.
Headquarters: Atlanta, Georgia.
Funding: $10 million from retail shareholders, Medipower, Fintech Ventures.
Latest valuation: $234 million.
Date of last valuation: October 2023.
Bona fides: By early 2024, the startup’s 240,000 customers had invested more than $1 billion on the platform.
Cofounders: Brian Dally, 52, and Nick Bhargava, 39, started the company after the 2000 Jobs Act introduced a new exemption which allows small investment offerings without the hefty compliance burden larger companies are subject to.
Valon
A cloud-based mortgage-servicing platform, Valon automates payments and allows borrowers to see their balance and other information about their loans online. Its customers include mortgage servicers Freedom Mortgage and Marlin Mortgage.
Headquarters: New York, New York.
Funding: $125 million from Andreessen Horowitz, 166 2nd, Rithm Capital and others.
Latest valuation: $1.1 billion.
Date of last valuation: July 2022.
Bona fides: Valon’s revenue grew to $30 million in 2023, up from $5 million in 2022.
Cofounders: CEO Andrew Wang, 31, previously a principal at Soros Fund Management; CTO Jon Hsu, 31, formerly a software engineer at Twilio
TWLO