Fintech founder hails big step forward after funding announcement

The Toronto-based mortgage tech company recently closed a $4 million funding round

Fintech founder hails big step forward after funding announcement

The successful closure of a $4 million Series A funding round marks a “massive” step forward for mortgage fintech Perch that will help it invest in tools and integrations and continue to scale upwards, according to founder Alex Leduc.

The company, a Toronto-based firm that describes its mission as “to simplify homeownership,” has secured investment from organizations including Second Century Ventures and Ontario Centre of Innovation, marking the latest stage in its rapid ascent.

Perch has expanded from about six or seven employees late last year to around 20 at present, Leduc told Canadian Mortgage Professional, with further growth anticipated as a result of the funding round’s closure.

“That [expansion] enabled us to develop a ton of velocity on the product development side and then on the technology side,” he said. “So we built a really strong baseline for the product – with the client, with the realtor, with our brokers.

“And now, we’re going to really take it a step further and we’re investing a lot in new tools, integrations into our referral partner sites, and things like machine learning models to help score and essentially prioritize leads for us and our referral partners.”

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The year has been an eventful one to date for the company, which launched its realtor portal recently– enabling real estate professionals to get more insight into their active pipeline to help convert more leads into deals – and introduced Perch Capital in June, giving it the ability to innovate on lending products.

“That’s really where we’re innovating,” Leduc said, “combining our partnerships with realtors, combining the purchase capital side with the brokerage side and really just kind of tying them all together to make things work.”

Among Perch’s most significant announcements this year was the unveiling of Pathfinder, a web-based application tool that uses market simulation and predictive modelling to help mortgage shoppers locate the best option for them based on how the market may be turning.

That’s been the company’s top performing tool this year, Leduc said, having proven especially useful given the twists and turns of the 2022 market and a shifting landscape for both fixed- and variable-rate products.

“The tool is able to break it down to the dollar of the expected difference based on the movements,” he explained. “That’s been really useful for us and our brokers in advising clients – or even if clients run it themselves, just to get insights.

“What we’re seeing is a lot of people get really opportune offers at a two-year return, but then what they’re not pricing is the renewal risk they have. So they have to renew into a much higher rate two years from now, [and] our model is helping them quantify how drastic that would be.”

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While many mortgage customers might be turning away from variable-rate options because of the prospect of further rate hikes, there’s also a strong possibility that those rates will start to fall again at some point in the next two years – a prospect that Perch’s model is able to account for, Leduc said.

After the company’s push into the realtor market this year, it will be maintaining that focus moving forward, while also turning its attention to the wealth advisory side.

That’s partly because many homeowners may not be leveraging their home equity strategically, according to Leduc, with Perch seeing an opportunity to service that client base.

“We’re going to be helping them get advice in regards to how [they] can build wealth with real estate and helping people ride it out with this high rate period,” he said. “Things like re-advanceable HELOCs, second mortgages, wealth advisory – those are all things that we’re keeping top of mind.”

In remarks accompanying the funding news, Second Century Ventures managing partner Tyler Thompson noted Perch’s potential to provide new and innovative solutions for homebuyers and borrowers.

“Housing affordability and rising rates have been a major barrier to homeownership for Canadians and our real estate agents,” he said. “We believe in Perch’s ability to continue improving on the existing process and product to ultimately create more solutions for borrowers and real estate agents that we know are needed in today’s market.”

The latest funding round follows the closure by Perch, which operates across the entire country, of a $1 million seed round in October 2021.