Valon Technologies raises $150M Series D at $2.3B valuation for AI-powered mortgage servicing

Speaker 2: Our next guest is Linda Du from Valen Technologies, the president, COO, and cofounder in the waiting room, soon to be interviewed in Northfield. Linda, welcome to the show. How are you doing? Hey, guys. Thanks for having me on. Thanks so much for hopping on. Big Big day. You raised some money. How much did you raise? Tell us about the round.

Speaker 8: Yep. So we just announced our series d, a $150,000,000 at...

Speaker 4: Didn't catch the last class part. What was the valuation?

Speaker 8: 2.3

Speaker 4: b. Wow. Huge. We're just saying b now. We're saying billion too much. We gotta just... Exactly. Honestly, the gong was so fun. That... That's what I came on here for. So I think we... Can we get the can we get the replay? Is that possible? I wanna watch I wanna watch it back. We wanna see the replay. Here we go. Alright. Wayne's It's not even facing you. Boom. Boom. There we go. Oh, no sound on the replay. Completely drowning out Linda. But... Well... Anyways, what do you actually do?

Speaker 8: So good. No. So we we build the system of record and vertical AI for servicing.

Speaker 2: For mortgage servicing, specifically. Correct? For more... Specifically starting with mortgage servicing. How old is the company?

Speaker 8: We we started in 2019. 2019. Okay. We're about... Yeah. We're about seven now. And was the was the framing at the time...

Speaker 2: This is a huge market. There's an opportunity for sort of point solution to vertical SaaS, and then the AI boom happened and you were able to just accelerate so dramatically that that's what's driving this round? Or or what what was the vision at the time?

Speaker 8: Yeah. That's exactly right. If you remember 2019, it's... We we were just a little late to the software eats the world party. Okay. And so I think mortgage was... Yeah, that's right. So mortgage was probably top three, top five big markets that hadn't been disrupted yet. And so I would say, you know, zooming out, we got really lucky with the timing of AI. It could have happened sooner, wouldn't have been ready, happened later, you know, we might have been too entrenched

Speaker 2: And then... To be able to pivot. Walk me through the the verticalization of your business and then what it seems like is de verticalization because you sold your servicing operation but partnered with Carrington Mortgage Services to use your your software. Right? So what was the what was the back and forth there strategically?

Speaker 8: Yeah. So the plan from the start has been that we wanted to deploy software and now AI into the industry. Mortgage companies are heavily heavily regulated and so they can't buy a de novo unproven system. It's just not something that from a risk tolerance standpoint they can do. And so, the way that we decided to go to market, it took six years, is we actually built a servicer first, built the technology alongside that servicer and then when the market made it clear that we'd kind of proven our point, we sold the servicer. And today, we're just a pure play. Yeah. What does the actual

Speaker 2: customer experience look like? Does this get white labeled into, like, bank software and then it's rolled up in in, like, your bank dashboard? Or or are you handling, like, mailings and notifications, dealing with defaults? Like, how what... How how broad is your mandate in terms of the relationship that a a lender has with a borrower?

Speaker 8: Yeah. So I I think of servicing as basically all of the work behind any long running financial transaction. So mortgages, perfect example, it's a thirty year obligation. Yeah. And because it's thirty years, a lot of stuff has to happen after you've signed that initial mortgage contract. Payments have to be collected. Mhmm. Escrow, tax, insurance has to be handled, a lot of things can happen to the homeowner over thirty years. They could, you know, fall behind on their mortgage, they could get married, someone could try to assume the mortgage, they could lose their job and need some help staying in their home. So all of that, end to end, for the life of the financial application is is servicing.

Speaker 2: So now we're fully... We're firmly in the AI era. Is... Do you even need to communicate the benefits of AI to your customers? Are there particular features that have unlocked, or is it all just like table stakes and and you are solid as like a system of record as a software product and the value is clear, so everything else is just sort of the cherry on top?

Speaker 8: Yeah. It's it's kind of interesting because the the industry today really runs on a system of record that was built in the nineteen sixties, so actually before the Internet was invented. And for decades.

Speaker 2: We go. Yeah. Some people like they like they like cars from the sixties. People like software from the vintage technology.

Speaker 8: Might be making a Yeah. The the artisanal

Speaker 7: vintage Yes. Right. Technology. Yeah.

Speaker 8: Yeah. Exactly. And for decades that was fine actually because humans could just use it. There were issues, but everyone was on a level playing field. Mhmm. AI has actually helped us a lot because now everyone feels like it's existential. Oh, And it turns out that if you don't have a system of record that is a single source of truth with very basic things like APIs and tools that an agent can call, it's it's kind of dead in the water. Yeah.

Speaker 2: Is there is is is there movement or does there need to be movement at, like, the government level? The only thing that I've seen recently on the mortgage side is, the proposal for fifty year mortgages, which I assume would be bullish for you, actually. Right? But but is there is there any, like, rumblings? Obviously, in Washington, everything's about, like, AI safety. But is there is there any movement for updating, like, any federal level regulations or rules to just make the actual experience of getting a mortgage as an American easier in the modern era? Or is this something that can be purely handled by the private markets?

Speaker 8: Yep. Purely handled by the private markets. Okay. Obviously... I mean, the thing about servicing is that if it's very simple, you don't actually need complicated technology to It's, do you know, in some ways, you can think about it on two dimensions, right? It's like I can go out and buy a coffee on the and that's actually a very simple experience. I don't need to, you know, back in the olden, olden days, like, I don't know, bring some chickens and bar the machine. Now you need an AI agent to call a thousand coffee shops I'm gonna try and reserve you a slot. I'm gonna try to pay for a latte with a chicken to And you need to pay for space. According... Just to see if we still know how. Yes. Barter economy. Yeah. Just just... Yeah. Exactly. Let me know how that goes. But but if you have a longer time horizon and then more complexity complexity in in the the form of regulations, then that's where you actually need sort of purpose built technology. Yeah.

Speaker 2: Yeah. That makes a ton of sense. Well, congratulations on the round. Yeah. Amazing progress. We love an overnight success. We love an overnight success.

Speaker 8: 2.3 B in just a few years. Just seven years in the making. Not bad. It's actually Yeah. Just seven year overnight Pretty Yeah.

Speaker 2: Yeah, exactly. But I'm sure there's some wild rides in there. Anyway, thank you so much for coming out. To meet you. Congratulations. Congrats to the team. And we'll talk to you soon. Thanks so much, guys. Goodbye. Let me tell you about Shopify. Shopify is the commerce platform that grows with your business and lets you sell in seconds online, in store, on mobile, on social, on marketplaces, and now with AI agents. Thank you for the sound, Keith, Jordy. So the the mighty American consumer never never doubt us. Doubt the mighty American consumer. Many people did, but they were wrong because the mighty American consumer is crashing through inflation and driving growth. The Wall Street Journal has an anecdote from Chicago. Happy hour at Chicago's Bar Roma was buzzing this past week as locals poured in for $10 cocktails and 11 bruschetta. Kathleen Harper and her husband would normally share a few appetizers, but tonight they were splurging on the $50 tasting menu. After a long day, I work from home. I like to just get out of the house, said Harper, who sells fraud protection services. Business has been good. That's a great quote for the journal. Because Because fraud, unfortunately, is up. So just printing on fraud prevention services and then going out to the bar. It's great. Harper says she worries about the health of the economy and rising prices for cash and... For gas and groceries, but feels secure enough to enjoy a good happy hour deal. Decisions like that across the economy show America's appetite for consumption is expanding. Americans are spending more on food, travel, couches, Halloween decor, notably absent Christmas decor. We gotta get that in there, Wall Street Journal. Pushing a correction, please. And most anything else they want or need, pushing through inflation and their own gloomy feelings about the economy. Kyla Scanlon, of course, coined the term vibe session a few years ago. We are still deep in it. Everybody thinks it's over, but they act like we're back. So, anyway, we can go deeper into the economic analysis of the American economy and the health of the American consumer later. But in the meantime, we got Ali Potoby from NEO, the founder and CEO. Welcome back to the show. Ali, how are doing?