Lower raises $100M, looks to challenge digital lenders Better, Rocket

Lower announced on Wednesday that it closed $100 million in a Series A fundraise.

Accel, a venture capital firm, funded the entire round and represented the first outside investment for the previously bootstrapped digital lender. As part of the investment, Accel partner John Locke will join Lower’s board of directors.

Lower produced over $300 million in revenue and $3.5 billion in mortgage volume since inception in 2014 and decided to tap into venture capital interest in order to grow, according to CEO Dan Snyder.

“We’re interested in really challenging the big players like Rocket and getting at a more level playing field with Better,” Snyder said in an interview

Lower can compete with leading digital lenders when it comes to customer service and speed, he said.

“One of the differentiators is we have the consumers work through as far as possible digitally, however, we still believe in 15 minutes with the expert advisor,” Snyder said.

Lower currently offers purchase and refinance loans through conventional, FHA and VA products, while holding the servicing on its loans. The company also utilizes subservicing. The Series A money will go towards company expansion, with the top priorities of building its own servicing platform — estimated to launch in early 2022 — as well as technology to speed up the lending process. Lower also plans to “heavily invest” in artificial intelligence and machine learning with the aim of making things easier for the customer and saving more time for human interaction.

The 1,700 employee Columbus, Ohio-based company focuses on millennial and Gen Z demographics, as well as any consumer trying to move from renter to homeowner. Fierce competition in the marketplace makes home buying harder for younger generations with less accumulated credit and savings than older ones. To address this, Lower offers a Federal Deposit Insurance Corp.-insured home savings account.

“There's a large contingency of customers that aren't ready; maybe their credit’s not completely perfect and they can't win that bid because of tight inventory,” Snyder said. “In line with making homeownership a reality, we felt like providing a home savings account with a high-yield and matching a portion of the deposit towards the funds to close on their home purchase would help.”