What happened: Rock Holdings Inc. is taking a controlling interest in a Vancouver startup specializing in connecting lenders and mortgage brokers
Why it matters: Lendesk will be tapping in to additional capital to help with expansion and hiring
The parent company of American mortgage lender Quicken Loans is taking a controlling interest in a B.C.-based startup.
Rock Holdings Inc. announced the deal Wednesday (April 24) with Vancouver’s Lendesk, a financial technology firm specializing in connecting mortgage brokers to lenders.
“It’s been a whirlwind,” CEO Alex Conconi told Business in Vancouver.
“As an entrepreneur, I’m quite proud of what we’ve done here.”
Financial terms of the deal were not disclosed.
Conconi founded Lendesk in 2014, overseeing its growth as it expanded to 45 workers, all based in the city.
The deal with Rock Holdings will keep Conconi at the helm as he continues to run Lendesk independently out of Vancouver.
The company moved into new Yaletown offices in January, which Conconi said has the capacity to hold about 70 workers.
He added the capital injection from Rock Holdings will help the company expand its footprint in Canada and hire additional workers in the near-term.
“In a short amount of time, the team at Lendesk has built technology to streamline communication and workflow between mortgage brokers and lenders in Canada, and established a strong network of brokers and lenders who are connected through Lendesk’s new platform,” Rock Holdings CEO Jay Farner said in a statement
“Ultimately the technology will benefit Canadian consumers, who will experience a smoother and quicker mortgage process. We look forward to working closely with the Lendesk team supporting them in their mission to innovate and reinvent the mortgage process for all of Canada.”
The deal comes more than a year after the introduction of Ottawa’s B-20 stress test, which has tightened up the lending industry in Canada.
Meantime, once-white-hot real estate markets like Vancouver have been easing off the throttle.
But Conconi said these developments aren’t necessarily detriments to Lendesk.
“When markets cool that’s when you actually see the innovation. When markets are hot and everybody’s winning, innovation almost seems like a little bit of a distraction,” he said.
Additional federal regulations introduced over the last decade has also been making the job of a mortgage broker more complicated, according to Conconi.
“It’s not that we’re making it easier for people to get credit who don’t deserve credit,” he said.
“We’re making it easier for the people who deserve credit — even under the stricter rules — but who might not have been able to get it because the process is just harder. We’re making the whole system more efficient and effective.”
Lendesk connects to institutional lenders including Scotia Mortgage Authority (Scotiabank), First National Financial, CMLS Financial, Equitable Bank, Merix, NPX and Lendwise.