The commercial property was slowly master technology; Despite the over $ 40 billion in funding market available, closing the deal is still largely manual, tedious and difficult.
In NYC a lion solves this problem by automating online workflows and collecting hundreds of millions of data points into machine learning software to ensure funding accuracy. To this end, the commercial real estate finance transaction platform raised $ 30 million to give it a $ 130 million valuation just two years after its inception.
The latest funding came four months after the company raised $ 10 million in seed funding led by NFX. Greenspring led the final round with First American Title. Existing investors NFX, Canaan Partners, JLL Spark, Animo Ventures and Ludlow Ventures have also joined to provide Leo with a total investment of over $ 34 million, according to the data. Crunchbase data…
Founder and CEO Lev Yakov Zar was previously the co-founder of Dispatch in Boston, which created tools for home service businesses. When he and his wife were going through the home buying process – and their mortgage failed – Zar decided to consider real estate financing.
He channeled his frustration toward becoming a licensed mortgage lender. After moving to New York, Zar helped a friend from a nonprofit refinance their building and saw firsthand what he said was a fragmented commercial real estate mortgage industry.
Companies like Blend are engaged in real estate lending, Zar told TechCrunch, but very few of them focus on commercial real estate, where lending is sensitive to interest rates and general depreciation. In addition, property owners must refinance every 5-10 years.
“Older companies like JLL, which is the investor, Cushman Wakefield and CBRE, are working on lending, but they are much more relationship-oriented than technology-oriented,” Zar said. “We think this is a necessary part because the transactions are so large and complex that they require a relationship, but transactions worth less than $ 1 billion are pretty straightforward. We have no relatives in terms of experience and product ”.
Initially, Zar and his team wanted to create Rocket Mortgage for Commercial Real Estate Lending, but found it difficult because real estate brokers wrote their own offer books for lenders. Instead, Leo is creating a technology platform that brings together over 5,000 lenders with information on what projects they would like to fund. Then he analyzes the client’s portfolio and in a matter of minutes connects it with the right lender, accepting 1% of the loan amount for each transaction as payment. Leo is also working to close deals online.
Zar was not looking for funding when investors approached him, 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 for product development to list conditions in seconds and close a loan in seven days. It may now take a week or two to get the list of conditions and 45 to 90 days to close the loan.
The company currently has about 40 employees working remotely from its New York headquarters, Miami R&D center, Los Angeles outpost and remotely. Investments will continue to expand the team.
Lev’s volume grew 10-fold last year, closing approximately $ 100 million in loans in 2020. Zar expects to close over $ 1 billion in 2021.
“Clients come back to us many times, and we have a lot of recommendations,” Zar said. “We want to be the platform on which capital market transactions are processed. You need an edge to communicate and find great deals. I don’t want to get involved with this, but when you find it, bring it to us, we will close it and provide asset management with the best option to close online and manage the deal from a single platform. ”
Meanwhile, Pete Flint, general partner of NFX, told TechCrunch that he got to know the Lev team over the past 18 months, testing the company through various stages of the global pandemic, and was impressed with how the company has handled it.
As a co-founder of Trulia, he saw firsthand the problems in the real estate business associated with finding and opening new properties, but as this problem was tackled, the focus shifted to financing. NFX is also an investor in Tomo and Ribbon, which specialize in home finance.
Eager to see what opportunities are opening up in the commercial real estate industry, Flint heard Lev’s name increasingly featured among brokers and industry insiders.
“When we got to know the Lev team, we realized that they were the best team to tackle this problem,” said Flint. “We also belong to a wonderful group of people participating in the round. People who are deep insiders in the industry will be able to look at strategy and business opportunities through a helpful lens. ”