Toronto-based mortgage startup Perch has secured a $4 million CAD Series A round from backers that include the venture arm of the National Association of Realtors (NAR), America’s largest trade association for the real estate industry.
The financing comes from Second Century Ventures, the strategic venture arm of the NAR. Other investors in the Series A round include the Ontario Centre of Innovation and Toronto-based alternative asset firm Best Funds. Perch told BetaKit there was no lead investor in the round, and declined to disclose whether any other investors took part.
“Record levels of pessimism towards ever owning a home in Canada support our ability to help Canadians.”
– Alex Leduc, Perch
Second Century Ventures is a return investor in Perch after the firm took part in the $1 million financing the startup secured in October 2021. At the time, Perch also joined Reach Canada, an accelerator program created by Second Century Ventures and backed by the NAR.
The Series A financing brings Perch’s total funding to date to $5.8 million. The latest funding includes both debt and equity, with Perch telling BetaKit only that the “majority” of the capital was equity.
Perch offers a suite of tools for buyers, homeowners, and realtors focused on helping each group make data-driven decisions about mortgages and real estate. The startup is also a licensed mortgage broker, which means it can offer consumers mortgages through partnerships with lenders. Currently, Perch claims to work with more than 30 lenders.
Some of Perch’s available tools include a mortgage calculator; a qualifier, where users can evaluate if they can afford their target property; a mortgage penalty calculator; and a First-Time Homebuyer Incentive benefit calculator.
Perch was founded in 2018 by CEO Alex Leduc, who previously worked for several publicly-traded mortgage companies, including MCAN Financial Group and Equitable Bank.
Perch purports to do things differently than most mortgage brokers by utilizing data. It claims to have a mortgage funding rate that is six times more efficient than the industry average, and also claims a 215 percent customer referral rate. The company says its user base spans thousands of people and it has funded more than $100 million in mortgages to date.
Mortgage and real estate more broadly have become increasingly popular areas for tech startups to tackle. Big players like Nesto, Neo Financial, and Questrade are all in the mortgage space, with newcomer Pine also having entered the Canadian market this year. Others in the proptech space include Properly, as well as Zillow and Rocket Mortgage in the United States.
While the predicted housing market correction is underway, what has drawn many of these tech companies to the space is a longstanding lack of digital transformation and difficulty for first-time home buyers to enter the market.
“Perch is on a mission to simplify homeownership,” said Leduc. “We enable first-time home buyers to get into the market sooner and help homeowners to build wealth efficiently by leveraging home equity.”
John Richardson, CEO of Best Funds, added: “innovation in the mortgage industry is long overdue.”
“By automating the mortgage broker process, Perch is well positioned to add efficiency and greater transparency for borrowers looking to find the right mortgage.”
“Over 60% of Canadians still go directly to their bank for mortgage advice, we’re working hard to change that behaviour,” said Leduc.
Perch plans to use its Series A financing to build on what it claims has been 130 percent year-over-year growth.
The startup is looking to expand its lending arm, Perch Capital; establish a new wealth advisor referral channel; grow its customer support and sales, and invest in increasing its brand awareness.
“Record levels of pessimism towards ever owning a home in Canada support our ability to help Canadians find their most effective path to homeownership,” said Leduc.
Feature image courtesy Perch.