MortgageHippo, a Chicago-based digital mortgage startup, announced it has closed a $2.25 million seed round.
The company will use the funding to expand its salesforce and software development team.
MortgageHippo’s flagship product, Swift, is a white-label solution for lenders looking to offer mortgages online. Founded as a consumer-facing business in 2013, the company shifted its focus to white-label software in early 2016.
Co-founder and CEO Valentin Saportas said the company pivoted after seeing a “perfect storm” of market developments driving traditional mortgage providers to take a closer look at new technological solutions.
“Millennials are finally coming into the market and that is incentivizing the use of technology,” he said. “You also see new regulation coming into the industry, and that’s eating away at profits, encouraging them to look at ways to automate and standardize the process to make it more efficient.”
Moreover, said Saportas, the marketing efforts of digital-first mortgage providers has heightened awareness about the growing market segment of consumers and brick-and-mortar lenders alike.
Saportas said Swift is designed to allow consumers to perform most of the loan origination process on their own while still giving them the option to get in touch with a loan officer when needed.
“I’m actually going through the process of buying a home myself right now and getting a mortgage,” said Saportas. “At some points, I still feel like there is a strong need for that human element.”
Headquartered in Catapult Chicago’s River North incubator space, MortgageHippo currently has eight employees. The company expects to hire another five or six employees over the next few months.
Halfway through Catapult’s two-year program, Saportas said his company has seen a lot of benefit from its tenure at Catapult, and that he expects to stay there for the program’s duration — provided that the team doesn’t outgrow the space.
“It’s a great community,” he said. “You can ask questions of anybody, and you can get really good answers right away from people who have gone through the same things you’re going through.”
MortgageHippo raised an initial $750,000 from the venture capital arm of @properties in January 2016. Today’s announcement of an additional $1.5 million raised from CMFG Ventures marks the official close of the company’s seed round.
The company's newest investor, CMFG Ventures, is the corporate venture arm of CUNA Mutual Group — an insurance and financial services company that works closely with credit unions across the United States.
“It’s not just an investment for us,” said Saportas. “It’s a very strategic relationship, and we’re very excited about it.”
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