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.”

 

#animo-ventures, #canaan-partners, #cbre, #enterprise, #finance, #first-american-title, #funding, #greenspring, #jll-spark, #lev, #ludlow-ventures, #nfx, #pete-flint, #real-estate, #recent-funding, #startups, #tc, #venture-capital, #yaakov-zar

Frontier launches with $2.8M round by NFX, to let low-skilled job candidates book their own interview

Frontier, which bills itself as a “new kind of vertically-integrated jobs marketplace” launches today with a $2.8M investment round led by NFX in the US, and backed by London’s firstminute Capital, FJ Labs, Cyan Banister, Ilkka Pannanen, Alex Bouaziz, Liquid 2 and several other funds and angels.

Frontier’s schtick is that it pre-tests applicants, weeds out the best candidates, and then allows them to directly book interviews with the employers, thus saving time and money in the hiring process.

But Frontier isn’t going after complex roles here. Its aimed at companies who need a high volume of low-skilled workers. Among its customers so far are Carrol’s (the largest franchisor of Burger King) and Concentrix. 

Elliot O’Connor, Founder and CEO of Frontier said: “We believe the hiring experience is a fragmented workflow for both employer and jobseeker, which dramatically slows down the time-to-fill for positions and leads to rigid labor markets  – something the world can’t afford right now. To fix hiring, a platform must own more of the hiring funnel than job platforms currently do, and use that position to redefine the experience.”

Elliot told me over a call that they are not using an algorithm in the AI sense of the word. It also removes unconscious bias by applying skill-based assessments: “We’re focused on high volume, low skilled workers, so for example, customer support or retail or warehouses. So we’re just assessing for things like typing speed etc. No one’s going to look at the resume. It’s a rule-based system so that the company does get to set the rules themselves. There’s no AI.”

He added: “We’ve gone and eaten up a lot of the different pieces of software that are out there and combined them into a single vertically integrated whole. So we’ve got a screening software that’s basically modular so every customer gets their own screening, according to their own criteria and the machine does it for them. So at the interviews they’re going to have qualified candidates.”

Pete Flint, NFX General Partner said: “Frontier is changing the entire talent sourcing process by providing an on-demand experience that’s already present in so many parts of life. Shortening the window of finding work and making hires is creating substantial benefits across large segments of the labor market. The network effects embedded in Frontier’s product and business model make it completely different to the traditional incumbents.”

#alex-bouaziz, #articles, #artificial-intelligence, #burger-king, #ceo, #cyan-banister, #elliot, #employment, #europe, #fj-labs, #london, #pete-flint, #recruitment, #tc, #united-states

Former Zillow execs raise $70M seed round for Tomo, which wants to simplify the mortgage process

There are so many startups pledging to reinvent the mortgage process that it’s hard to keep up. But for anyone who has had to go through the process of applying for one, it’s clear that there’s plenty of room for improvement.

The latest startup to raise venture money with the goal of making the process “smarter and faster” is one that was founded by a pair of executives that spent years at real estate giant Zillow. Tomo is very early stage — so early stage that it is only launching operations in conjunction with announcing it has just raised $70 million in seed funding. That’s a massive seed round by any standards (the third-largest in the U.S., according to Crunchbase), but especially for the real estate tech space (perhaps the largest ever).

Ribbit Capital led the financing, which also included participation from DST Global, NFX and Zigg Capital.

Former Zillow executives Greg Schwartz and Carey Armstrong founded Stamford, CT-based Tomo in the fall of 2020 to take on big banks when it comes to providing mortgages to consumers. CEO Schwartz first joined Zillow in 2007, where he says he “built the sales and revenue operations from the ground up.” Armstrong, who serves as Tomo’s chief revenue officer, previously led business strategy, product strategy and core operations for Zillow’s $1 billion buyer services business. 

Launching today in Seattle, Dallas and Houston, Tomo says it will do things like issue fully underwritten pre-approvals “within hours, not days” and guarantee on-time closing. This is particularly important in competitive markets with multiple buyers making offers on homes.

It plans to use data to get homebuyers to closing in as little as 21 days, which they say is less than half of the industry average of 47 days. And, on top of all that, it claims it will offer “the lowest rates in the industry” with “customer-obsessed service.”

The company claims that besides having founders that have years of experience at a company with a reach like Zillow’s, they also aim to be different from other competitors in the space in that they are strictly focused on the buyer. For example, it won’t do any refinancing for existing homeowners but focus strictly on helping buyers secure new mortgage loans.

“The big banks have never made more money, yet an experience with their mortgage business has never been worse,” Schwartz told TechCrunch. “And it’s because the incumbents have no reason to fundamentally change.”

While it’s early days yet, only time will tell if Tomo can live up to its lofty goals. No doubt it has plenty of competition. In the past week alone, we’ve reported on two other digital mortgage startups raising significant funding rounds, including Lower and Accept.

Tomo’s investors are clearly confident about its potential.

Ribbit Capital’s Nick Huber said his firm had been connected to Schwartz and Armstrong prior to their even starting Tomo.

“When we learned that the two of them were working together, we immediately knew that we had to be a part of the journey,” he said. “We gained the conviction to lead the seed round as the team shared more of their vision for the future of home buying, which is a broken experience that they deeply understand and have the insight and relationships to fix.”

NFX founder and general partner Pete Flint has known Schwartz and Armstrong under a different capacity. They were once rivals. Flint co-founded another online real estate giant, Trulia and was its CEO and chairman from its 2005 inception until it was acquired by Zillow for $2.5 billion in 2015.

“We were initially competitors and then deep collaborators after the Trulia/Zillow merger,” Flint said. Once the pair formed Tomo, Flint says NFX “had not seen a team that was so experienced and thoughtful about the entire real estate experience that was going after the mortgage and home buying opportunity.”

In fact, the investment represents NFX’s largest initial investment to date.

“They are rethinking the entire software stack and building a modern fintech company, free of legacy constraints,” he added.

#dallas, #dst-global, #finance, #fintech, #funding, #fundings-exits, #houston, #mortgage, #nfx, #nick-huber, #pete-flint, #real-estate, #recent-funding, #ribbit-capital, #seattle, #startups, #trulia, #united-states, #venture-capital, #zillow

SESO Labor is providing a way for migrant farmworkers to get legally protected work status in the U.S.

As the Biden Administration works to bring legislation to Congress to address the endemic problem of immigration reform in America, on the other side of the nation a small California startup called SESO Labor has raised $4.5 million to ensure that farms can have access to legal migrant labor.

SESO’s founder Mike Guirguis raised the round over the summer from investors including Founders Fund and NFX. Pete Flint, a founder of Trulia joined the company’s board. The company has 12 farms it’s working with and negotiating contracts with another 46.

Working within the existing regulatory framework that has existed since 1986, SESO has created a service that streamlines and manages the process of getting H-2A visas, which allow migrant agricultural workers to reside temporarily in the U.S. with legal protections.

At this point, SESO is automating the visa process, getting the paperwork in place for workers and smoothing the application process. The company charges about $1,000 per application, but eventually as it begins offering more services to workers themselves, Guirguis envisions several robust lines of revenue. Eventually, the company would like to offer integrated services for both farm owners and farm workers, Guirguis said.

SESO is currently expecting to bring in 1,000 workers over the course of 2021 and the company is, as of now, pre-revenue. The largest industry player handling worker visas today currently brings in 6,000 workers per year, so the competition, for SESO, is market share, Guirguis said.

America’s complicated history of immigration and agricultural labor

The H-2A program was set up to allow agricultural employers who anticipate shortages of domestic workers to bring in non-immigrant foreign workers to the U.S. to work on farms temporarily or seasonally. The workers are covered by U.S. wage laws, workers’ compensation and other standards, including access to healthcare under the Affordable Care Act.

Employers who use the the visa program to hire workers are required to pay inbound and outbound transportation, provide free or rental housing, and provide meals for workers (they’re allowed to deduct the costs from salaries).

H-2 visas were first created in 1952 as part of the Immigration and Nationality Act, which reinforced the national origins quota system that restricted immigration primarily to Northern Europe, but opened America’s borders to Asian immigrants for the first time since immigration laws were first codified in 1924. While immigration regulations were further opened in the sixties, the last major immigration reform package in 1986 served to restrict immigration and made it illegal for businesses to hire undocumented workers. It also created the H-2A visas as a way for farms to hire migrant workers without incurring the penalties associated with using illegal labor.

For some migrant workers, the H-2A visa represents a golden ticket, according to Guirguis, an honors graduate of Stanford who wrote his graduate thesis on labor policy.

“We are providing a staffing solution for farms and agribusiness and we want to be Gusto for agriculture and upsell farms on a comprehensive human resources solution,” says Guirguis of the company’s ultimate mission, referencing payroll provider Gusto.

As Guirguis notes, most workers in agriculture are undocumented. “These are people who have been taken advantage of [and] the H-2A is a visa to bring workers in legally. We’re able to help employers maintain workforce [and] we’re building software to help farmers maintain the farms.”

Opening borders even as they remain closed

Farms need the help, if the latest numbers on labor shortages are believable, but it’s not necessarily a lack of H-2A visas that’s to blame, according to an article in Reuters.

In fact, the number of H-2A visas granted for agriculture equipment operators rose to 10,798 from October through March, according to the Reuters report. That’s up 49% from a year ago, according to data from the U.S. Department of Labor cited by Reuters.

Instead of an inability to acquire the H-2A visa, it was an inability to travel to the U.S. that’s been causing problems. Tighter border controls, the persistent global pandemic and travel restrictions that were imposed to combat it have all played a role in keeping migrant workers in their home countries.

Still, Guirguis believes that with the right tools, more farms would be willing to use the H-2A visa, cutting down on illegal immigration and boosting the available labor pool for the tough farm jobs that American workers don’t seem to want.

Photo by Brent Stirton/Getty Images.

David Misener, the owner of an Oklahoma-based harvesting company called Green Acres Enterprises, is one employer who has struggled to find suitable replacements for the migrant workers he typically hires.

“They could not fathom doing it and making it work,” Misener told Retuers, speaking about the American workers he’d tried to hire.

“With H-2A, migrant workers make 10 times more than they would get paid at home,” said Guirguis. “They’re taking home the equivalent of $40 an hour. The H-2A is coveted.”

Guirguis thinks that with the right incentives and an easier onramp for farmers to manage the application and approval process, the number of employers that use H-2A visas could grow to be 30% to 50% of the farm workforce in the country. That means growing the number of potential jobs from 300,000 to 1.5 million for migrants who would be under many of the same legal protections that citizens enjoy, while they’re working on the visa.

Protecting agricultural workers through better paperwork

Interest in the farm labor nexus and issues surrounding it came to the first-time founder through Guirguis’ experience helping his cousin start her own farm. Spending several weekends a month helping her grow the farm with her husband, Guirguis heard his stories about coming to the U.S. as an undocumented worker.

Employers using the program avoid the liability associated with being caught employing illegal labor, something that crackdowns under the Trump Administration made more common.

Still, it’s hard to deny the program’s roots in the darker past of America’s immigration policy. And some immigration advocates argue that the H-2A system suffers from the same kinds of structural problems that plague the corollary H-1B visas for tech workers.

“The H-2A visa is a short-term temporary visa program that employers use to import workers into the agricultural fields … It’s part of a very antiquated immigration system that needs to change. The 11.5 million people who are here need to be given citizenship,” said Saket Soni, the founder of an organization called Resilience Force, which advocates for immigrant labor. “And then workers who come from other countries, if we need them, they have to be able to stay … H-2A workers don’t have a pathway to citizenship. Workers come to us afraid of blowing the whistle on labor issues. As much as the H-2A is a welcome gift for a worker it can also be abused.” 

Soni said the precarity of a worker’s situation — and their dependence on a single employer for their ability to remain in the country legally — means they are less likely to speak up about problems at work, since there’s nowhere for them to go if they are fired.

“We are big proponents that if you need people’s labor you have to welcome them as human beings,” Soni said. “Where there’s a labor shortage as people come, they should be allowed to stay … H-2A is an example of an outdated immigration tool.”

Guirguis clearly disagrees and said a platform like SESO’s will ultimately create more conveniences and better services for the workers who come in on these visas.

“We’re trying to put more money in the hands of these workers at the end of the day,” he said. “We’re going to be setting up remittance and banking services. Everything we do should be mutually beneficial for the employer and the worker who is trying to get into this program and know that they’re not getting taken advantage of.”

#america, #banking, #biden-administration, #california, #congress, #founder, #founders-fund, #funding, #fundings-exits, #healthcare, #immigration, #labor, #nfx, #oklahoma, #pete-flint, #stanford, #startups, #tc, #trulia, #trump-administration, #u-s-department-of-labor, #united-states

La Haus is bringing US tech services to Latin America’s real estate market

The alchemy for a successful startup can be hard to parse. Sometimes, it’s who you know. Sometimes it’s where you go to school. And sometimes it’s what you do. In the case of La Haus, a startup that wants to bring U.S. tech-enabled real estate services to the Latin American real estate market, it’s all three.

The company was founded by Jerónimo Uribe and Rodrigo Sánchez Ríos, both graduates of Stanford University who previously founded and ran Jaguar Capital, a Colombian real estate development firm that had built over $350 million worth of retail and residential projects in the country.

Uribe, the son of the controversial Colombian President Daniel Uribe (who has been accused of financing paramilitary forces during Colombia’s long-running civil war and wire-tapping journalists and negotiators during the peace talks to end the conflict) and Sánchez Ríos, a former private equity professional at the multi-billion-dollar firm Lindsay Goldberg, were exposed to the perils and promise of real estate development with their former firm.

Now the two entrepreneurs are using their know-how, connections and a new technology stack to streamline the home-buying process.

It’s that ambition that caught the attention of Pete Flint, the founder of Trulia and now an investor at the venture capital firm NFX. Flint, an early investor in La Haus, saw the potential in La Haus to help the Latin American real estate market leapfrog the services available in the U.S. Spencer Rascoff, the co-founder of Zillow, also invested in the company.

“Latin America is very early on in its infancy of having really professional agents and really professional brokerages,” said Flint.

La Haus guides home buyers through every stage of the process, with its own agents and salespeople selling properties sourced from the company’s developer connections.

“The average home in the U.S. sells in six weeks or less,” said La Haus chief financial officer Sánchez Ríos in an interview. “That timing in Latin America is 14 months. That’s the dramatic difference. There is no infrastructure in Latin America as a whole.”

La Haus began by reaching out to the founders’ old colleagues in the real estate development industry and started listing new developments on its service. Now the company has a mix of existing and new properties for sale on its site and an expanded geographic footprint in both Colombia and Mexico.

“We have a portal… that acts as a lead-generating machine,” said Sánchez Ríos. “We aggregate listings, we vet them. We focus on new developers.”

The company has about 500 developers using the service to list properties in Colombia and another 200 in Mexico. So far, the company has facilitated more than 2,000 transactions through its platform in three years.

“Real estate now is turning fully digital and also in this market professionalizing,” said Flint. “The publicly traded online real estate companies are approaching all-time highs. People are just prizing the space that they spend their time in… the technologies from VR and digital walkthroughs to digital closes become not just a nice to have but a necessity. “

Capitalizing on the open field in the market, La Haus recently closed on $10 million in financing led by Kaszek Ventures, one of the leading funds in Latin America. That funding will be used to accelerate the company’s geographic expansion in response to increasing demand for digital solutions in response to the COVID-19 epidemic.

“Because of Covid-19, consumers’ willingness to conduct real estate transactions online has gone through the roof,” said Sánchez Ríos, in a statement. “Fortunately we were in the position to enable that, and we expect to see a permanent shift online in how people conduct all, or at least most, of the home-buying process. This funding gives us ample runway to build the end-to-end real estate experience for the post-Covid Latin America.”

Joining NFX, Rascoff, and Kaszek Ventures are a slew of investors, including Acrew Capital, IMO Ventures and Beresford Ventures. Entrepreneurs like Nubank founder David Velez; Brian Requarth, the founder of Vivareal (now GrupoZap); and Hadi Partovi, CEO and founder of Code.org, also participated in the financing.

“We backed La Haus because we saw many of the same ingredients that resulted in a fantastic outcome for many of our successful companies: A world-class team with complementary skills; a huge addressable market; and an almost religious zeal by the founders to solve a big problem with technology,” said Hernan Kazah, co-founder and managing partner of Kaszek Ventures. 

#acrew-capital, #colombia, #david-velez, #hadi-partovi, #kaszek-ventures, #la-haus, #latin-america, #mexico, #nfx, #nubank, #online-real-estate, #pete-flint, #real-estate, #recent-funding, #spencer-rascoff, #stanford-university, #startups, #tc, #trulia, #united-states, #vivareal, #zillow

This venture firm is offering fast funding in a time of uncertainty

The early-stage venture firm NFX is launching a seed-funding initiative today that invites founders to apply for seed funding of $1 million to $2 million in exchange for 15% of their company.

Why is this interesting? It’s not because of the size stake that NFX is taking, though 15% is notable for remaining fair in a market where founders are suddenly facing serious headwinds.

The special catch is that NFX says founders who apply will receive a commitment in nine days or less.

It’s a touch gimmicky. It’s also a smart stance for a firm to take so publicly, during what’s surely a trying period for founders who aren’t already connected to venture firms.

As we’re written before, the public markets have tanked, making it harder for the money behind venture capitalists to get excited about seeing more money funneled right now into highly illiquid startups.

As many VCs have noted in recent weeks, it’s also a challenge for them to adjust to a world without the face-to-face meetings on which they are so reliant. Neil Sequeira of Defy Capital, for example, recently told us his firm has been actively investing since early March, but he readily admitted that, “In every case when we’ve been able to move really quickly, we’ve actually known the founders for the most part for a decade.”

Ellie Wheeler, an investor with Greycroft, echoed the sentiment during a panel discussion last week, asking, “How do you mimic what you pick up from spending time together casually and formally [with a founder seeking capital]? I don’t think people have figured that out.”

Even with some taking to Twitter to advertise that they are, indeed, open for business, others say they’ve been a little busy in recent weeks, trying to find soft landings for, or extend the runway of, existing portfolio companies. (The startup industry has also been grappling with how to extract funding from the government’s $349 billion paycheck protection program.)

Enter NFX with a new initiative that firm swears it was going to roll out anyway but that’s timed especially well for this very moment in time.

Here’s how it works. Last year, NFX — founded by James Currier, Pete Flint and Gigi Levy-Weiss, operators who’ve been involved, respectively, in the founding of the social network Tickle, the home buyers’ site Trulia, and the online travel site Lastminute.com — closed its second fund with $275 million.

It planned to use that capital to fund between 15 and 20 companies per year. Now, NFX — which is based both in the Bay Area and in Israel, where Levy-Weiss lives — is carving out $20 million from that pool for this new enterprise, which will almost double its investing pace.

“We’re really leaning into this environment,” said Flint yesterday on a Zoom call that Currier also joined.

How it will invest that $20 million isn’t so unique to NFX, which is accustomed to working with and meeting founders remotely because of its own distributed team.

As Currier explains it, “A lot of this is just carving out enough time to talk on Zoom with the founder about who they are, and how they think.” The firm also calls others who can talk about the individual’s strengths and weaknesses, and it talks with more of the startup’s team online, which Currier believes can be a richer and more informative experience than merely meeting with a founder who has flown in from L.A. or New York by himself or herself to pitch investors.

In fact, VCs may soon discover that there are advantages to seeing a founder in their home, adds Flint.

“Remote work from home has the consequence of getting to understand the full person — not just how they [present] at the office but how they spend their time and what their kids are doing,” he says.

“You avoid this manufactured pitch process and you can have more authentic conversations about what they want to do with the next 10 years of their life. If a kids barges in, that’s just fine. It reduces the fundraising theater we [as an industry have] built up over the years.”

Unsurprisingly, some sophisticated software should also help the firm, which in the past has indexed heavily on internal platforms that help its portfolio companies.

They need only upload a deck (here), answer 12 questions, and record a one-minute video of themselves and their team. The idea is to quickly and clearly extract information that’s often hard to pull out of a pitch meeting.

After that, NFX promises feedback within three business days and a final investment decision within nine days.

Whether or not it leads to the Next Big Thing can only be answered in time. In the meantime, NFX may well see a lot of interesting ideas.

If they see some terrible business plans, too, presumably that’s also okay, given the goodwill the move is likely to generate.

“Other investors are pausing or saying they’re pausing,” says Flint. “But we’re increasing the rate at which we’re investing and putting structure around [our investments] and making it easier for founders to get money quickly.

“We think it’s a great time to start or scale a company, and we want to be that partner right now.”

#coronavirus, #covid-19, #james-currier, #nfx, #pete-flint, #tc, #venture-capital