What the business is
A tech-enabled mortgage servicer: Valon collects payments and services borrowers for the 15–30 year life of their loans.
The bet
That a vertically integrated, cloud-native servicer can cut mortgage servicing costs by up to 50% and break the industry's software monopoly.
Starting capital
$50M Series A led by a16z with Jefferies, New Residential (Fortress affiliate) and Adam Neumann's family office; $3.2M prior seed (Alley Corp, Soros, Kairos, Zigg Capital).
How it started
Andrew Wang, a former mortgage-servicing investor frustrated by 'the lack of service', founded Valon (then Peach Street) in June 2019 with Eric Chiang and Jon Hsu, who brought product and engineering experience from Google and Twilio.
What happened
Concurrent with the February 2021 raise, Valon won Fannie Mae's green light to service government-sponsored loans, operated in 49 states with New York planned, and committed to $10 billion of servicing contracts in its first year. Wang argued the pandemic had exposed incumbents' antiquated technology as forbearance requests spiked; a16z's Angela Strange joined the board in mid-2020. The capital was earmarked to triple headcount to about 100 and buy more mortgage servicing rights.
What has to be true
It attacks servicing — the boring 15-to-30-year tail of every mortgage — rather than the crowded origination front end.
A pandemic-driven foreclosure wave was the forcing function: incumbents' call centres visibly failed borrowers in forbearance.
The Fannie Mae approval doubled as both distribution and proof that a startup could clear federal servicing bars.
Vertically integrating the stack is what makes the 50% cost-reduction claim even imaginable.
What can be applied
The dullest layer of a fintech stack — servicing, not origination — is where a decade of 250% cost inflation hides an opening for a vertically integrated rebuild.
Aftermath
As of 2 February 2021, Valon operated in 49 states, expected to add New York that year, and was hiring toward 100 staff while acquiring more servicing rights; a16z's Angela Strange sat on its board.
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