The New York-based company provides a real estate platform with an emphasis on the mortgage part of the homebuying process. If a buyer is unable to secure a loan before the home purchase closes, Ribbon will buy the property itself and provide 180 extra days to obtain a mortgage. The startup is currently active in North Carolina and South Carolina, with plans to expand into 10 new markets by the end of 2019.
In the venture capital world, real estate tech is a big industry that's been a hotbed of VC investment over the last several years: PitchBook data shows that VCs poured more than $6 billion into the space in 2017, and this year has seen nearly $4 billion worth of venture investment so far. Just last month, SoftBank participated in two separate $400 million rounds for real estate tech companies Opendoor and Compass.
Mortgage tech hasn't received as much attention as the larger real estate tech industry, but global VC investment in the subsector has picked up over the last five years:
Ribbon's funding makes up a significant chunk of the venture financing that's gone into mortgage tech companies this year. The startup's business model is one example of what others in the industry are trying to do—but it's certainly not the only company looking to bring the mortgage process into the 21st century.
SoFi, the online lending company that started out as a service for student loans and has since expanded to provide mortgages and other forms of debt financing, has been one of the biggest recipients of VC funding in the space. The business brought in more than $1.2 billion in 2015, accounting for the majority of that year's total financing in the sector. LendingHome and Better Mortgage are also among the online mortgage providers that have raised significant VC funding since 2014.
There are plenty of other businesses in the sector that, like Ribbon, offer services other than a mortgage marketplace. Among the 30-plus mortgage tech startups that have raised capital in 2018 is Roostify—the developer of a website that provides step-by-step guidance for filling out loan applications—which gathered $25 million earlier this year. There's also Notarize, a digital notarization platform that raised $20 million in April.
It makes sense that VC investment in the mortgage tech space has shot up over the last five years. Back in 2010, a year that saw just one mortgage deal, 64% of mortgages originated from transactions with the top five deposit-taking banks, according to a report from Oliver Wyman Mortgage Insights. By 2016, just 25% of mortgages originated from the top five banks. And in 2017, submitting an application online became the most common method of applying for a mortgage for the first time, according to a study from JD Power.
As consumers increasingly turn to their computers for help with home loans, it's likely venture capitalists will continue making robust investments in the space.
Related read: The top 12 VC investors in global construction tech