Toronto-based FinTech startup Baseline began as a real estate private lending company.
After finding its needs unmet by existing solutions—which cater largely to traditional lenders—the Baseline team decided to build its own system and over time, replaced nearly all of the firm’s technology stack with proprietary software purpose-built to manage its operations more efficiently.
“Baseline is building the operating system [private lenders] need.”
Alex Norman, N49P
Whenever Baseline founder and CEO Shaye Wali would share this tech with peers in private lending, others asked if they could use it.
“That happened enough times where we decided that we should just offer this as a SaaS solution,” Wali told BetaKit in an exclusive interview.
In 2022, Baseline made the jump, exiting the private lending business and forming a new company focused entirely on its loan servicing and origination software for private lenders, which it launched a few months ago. Now, the startup has secured approximately $2.2 million CAD ($1.6 million USD) in funding led by Toronto’s N49P Ventures to fuel the growth of its platform and capture more of the growing private lending market.
The simple-agreement-for-future-equity round, which closed in April, also saw support from Exit North Ventures and angel investor Tim Dewerth. It marks Baseline’s first venture capital funding to date. Wali entirely self-funded Baseline’s operations until obtaining a $500,000 loan last year from RBC through the Canada Small Business Financing Program.
Asked how Baseline classifies this round, Wali noted that by “strict definition” this is a pre-seed round, but said it “looks and feels more like a seed” given that the startup already has customers, revenue, and a fleshed-out product that combines borrower-facing point-of-sale, loan origination, loan servicing, and investor management capabilities into a single platform.
Wali began his career working in debt and credit at Morgan Stanley for four years. In 2016, with a desire to do something entrepreneurial and an interest in real estate investing, he launched Baseline Lending. Three years later, Baseline Lending began developing the product that eventually became Baseline after realizing how “outdated and archaic” some of the available solutions were.
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Wali and Baseline Lending’s two other employees stayed on through this 2022 pivot. He said this continuity was “critical” as the trio brought private lending domain expertise that underpins the work Baseline does today.
Wali and N49P partner Alex Norman view Baseline’s private lending market experience as a competitive advantage. “The founding team had the right blend of industry knowledge and proven technology ability,” Norman told BetaKit, adding that he has been impressed by the startup’s progress to date.
“They have built the best product in the industry, customers love them, and they have a vision to make life easier for customers,” Norman said.
According to Wali, many existing lending software tools are built for traditional lenders like banks, but those companies and teams are structured very differently than private lenders—which derive their capital from different sources, manage their portfolios differently, and view opportunities differently.
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Given this, Wali said that private lenders rely heavily on Microsoft Excel and a cobbled-together mix of other solutions. The tech that does exist for private lenders, he said, is often dated and typically mimics traditional lending systems.
“We have a pretty clear advantage in terms of what we can offer private lenders, and that’s a modern and more complete solution,” he said.
With Baseline, Wali said that private lenders “don’t have to do double entry or piece together the different solutions to make things work.” He highlighted that the company also offers a customer portal for investors and borrowers, something he said is typically only available to institutions and companies with the budgets to build out their own.
Baseline CEO Shaye Wali claims the startup offers private lenders “a modern and more complete solution.”
The private lending market is large and growing quickly as regulators have tightened requirements on traditional lenders in the wake of the 2008 financial crisis, rising interest rates, and recent bank failures. Wali said Baseline sees room in “helping those other institutions stepping in to fill that void [to] operate their businesses much more efficiently.”
“There are 30,000 active lenders who have provided over $500 billion USD in private lending,” said Norman. “The market is growing rapidly and these lenders are scrambling to find the software that enables them to scale efficiently. Baseline is building the operating system they need and can help customers with operations, marketing, sales, and so much more.”
To start, Baseline has focused its efforts on the segment of the market it knows best: real estate private lending. Over time, Wali hopes to cater to a wider swath of private lenders.
The startup’s customer base currently includes small to medium-sized lenders across Canada and the United States. During the coming year, Baseline plans to move up-market to serve large and enterprise lenders. To do that, Baseline intends to invest in product development to ensure its software can meet the requirements of bigger clients.
Feature image courtesy Baseline.