Real Estate

Pylon Closes $8.5M Round From Conversion Capital, Fifth Wall, Peter Thiel And More Marquee Investors

Pylon, the startup bringing a way for lenders and fintechs to embed end-to-end mortgage tools to their existing platforms, will announce today the raise of $8.5 million in seed funding. Conversion Capital led the round, with participation from Peter Thiel, Fifth Wall, Montage Ventures, QED Ventures and Village Global. The round included angel investors from Zillow, SoFi, Ramp, Figure and Blend.

Pylon cofounder Trent Hedge (a Forbes 30 Under 30 alum) previously founded Atmos, a custom construction firm, which sparked the idea for finding a way for non-traditional lenders to provide mortgage loans since that was the number one request from customers at Atmos, he said in an interview.

“​​In order to build a lender or even a mortgage broker, you have to get licensed state by state. You have to become an expert on mortgages, you have to stand up capital markets and raise debt facilities and get approved by Fannie Mae. By the end of it you’re looking at at least a few million dollars and one to two years to get set up,” explained Hedge. “I looked at it and was like, ‘this doesn’t make any sense’. We’ve seen banking as a service as a whole. We’ve seen those folks build this standardized infrastructure layer and we haven’t seen that in mortgage. I’ve been thinking about it for the last few years.”

Founded earlier this year, and recently vetted by Freddie Mac, Pylon describes their offering as a ‘full stack’ approach, providing a white-labeled interface which can pre-fill loan applications, instantly verify income and other assets, pull credit, offer loan products such as mortgages and HELOCs with pre-arranged debt capital, approve borrower applications and comply with regulatory requirements. The goal is for many non-bank lenders, such as fintechs, neobanks or even retail stores, to end up being a provider of mortgages.

Currently Pylon has about 15 early customers, which Hedge describes as design partners helping to refine the experience from end to end. Combined they total approximately $3.5 billion in loan volume. One of those clients, Doorvest, has already opened up to the public and while Hedge declined to name the others he did share several were part of the Fifth Wall portfolio and another of them was a top five lender.

Pylon is licensed to operate in Texas, Florida, Georgia, Colorado, Oregon, Ohio & Oklahoma.

“The world needs something like Pylon to exist,” said Christian Lawless, founder of Conversion Capital which led the round. “That’s going to be hard to build and it will have a complex road ahead. But we led the seed deal for that reason. We really do believe that this should exist and it will have to exist in some way, shape, or form.”

“The unique thing about Pylon is that all these consumer-facing companies, these neobanks, fight for the last consumer. You’ll need value add products to differentiate from other people,” Lawless continues. “I think we’re going to see what comes out of the ashes over the next five years [will] be some really profoundly great companies that are better technology. They’re better systems and they’re better products for the new normal.”

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