Digital mortgage servicer Valon (formerly known as Peach Street) announced on Tuesday it picked up $50 million in a Series A funding round spearheaded by venture capital heavyweight Andreessen Horowitz.
Valon now boasts $53 million in total funding to date, and it is aiming its sights on industry giant Black Knight.
Others participating in this round included previous investors Jefferies Financial Group, New Residential Investment and an affiliate of Fortress Investment Group. Repeat investor 166 2nd, the family office of Adam Neumann, co-founder of WeWork, also contributed to the latest round.
Founded in 2019 and marketed as a mobile-friendly servicer, Valon allows borrowers to make payments, view balances, request information and manage escrows through its cloud-based platform. It also allows lenders to request API data feeds and view borrow performance.
The software is built on Kubernetes, an open-source automation platform designed by Google and a familiar program to Valon co-founders Andrew Wang and Eric Chiang, who had both previously worked for the internet search giant. Third co-founder Jon Hsu is also familiar with cloud-based development having worked for Twilio, a cloud-based communication platform.
According to a spokesperson for Valon, the company operates as a competitor to tech giant Black Knight, whose technology is used by the servicers of roughly half of all U.S. residential loans.
“We’re on the cusp of a mortgage foreclosure crisis comparable to 2008, and the majority of homeowners struggling to make their loan payments are unaware of their options,” said Wang.
“Currently, the largest mortgage servicing software controls more than half of all U.S. residential loans, effectively creating a monopoly in the market. This stranglehold has driven servicing costs up nearly 250% in the past decade, and the fees are passed on directly to the borrower,” Wang said.
Alongside its funding round announcement, Valon also revealed that it had been approved by Fannie Mae to service its government sponsored home loans. Fannie and Freddie Mac currently support about half the U.S. mortgage market.
“The Fannie Mae approval only serves as further validation of the platform the team has created – it meets regulations, and brings a step-function improvement for consumers, for mortgage originators and investors alike,” said Angela Strange, a general partner at a16z.
In concert with the fundraise, Strange and ex-Fannie Mae CEO and Blend President Tim Mayopoulos joined Valon’s board of directors.
Valon claims it has received commitments for an estimated $10 billion in servicing volumes in 2021. The company operates in 49 states, with New York expected to be added this year.
According to the release, Valon’s latest raise will be used to ramp up hiring and build out its operations to acquire more Mortgage Servicing Rights.
Lead investor Andreessen Horowitz has made big bets on housing-related startups before. It’s a big investor in proptech giants like AirBnB and Flyhomes and smaller startups like Brazil-based housing marketplace Loft.