Vancouver-based Fintech and Proptech startup Fraction Technologies has announced in February 2021 that it has raised CAD 289M in equity and debt financing.
The startup will use proceeds from the funding round to launch in Canada, increase its team’s headcount, expand its technology platform, and prepare for its launch in the United States.
According to the startup, it saw extraordinary interest in its solution before launching, with over CAD 20M in demand from interested homeowners.
As per a source, a fraction of the CAD 289M consisted of debt. Fraction co-founder and CEO Hayden James stated the debt financing would be used to grow Fraction’s business and fund mortgages. The debt was provided by a prominent global bank whose name was not disclosed.The equity portion of the funding, which denotes seed capital for the startup, was closed in November. Venture capital firms who took part in the funding round are Impression Ventures, Primetime Partners, Global Founders Capital, and Panache Ventures. With the announcement of the latest funding round, Fraction is coming out of stealth mode (a company’s brief state of secretiveness, usually undertaken to avoid alerting competitors to a pending product launch or another business initiative) with the launch of its first product, the Fraction Appreciation Mortgage, which enables customers to convert up to 40 per cent of their home equity into tax-free cash. Fraction is a combination of FinTech and Proptech and focuses on delivering what it says are socially mindful financial solutions.
Fraction Technologies was founded in 2018 and calls itself a state-of-the-art digital platform that enables homeowners to manage and expand their home equity in a way not done before. The startup’s general mission is to empower property holders with socially mindful financial solutions and transform the reverse mortgage industry.
Customers can use the capital Fraction provides to pay for home renovations, retirement expenses, or other purposes, such as buying a second home. The startup currently serves in Ontario and British Columbia.
Rayan Rafay, co-founder and COO and CFO of Fraction said, refunding a mortgage with a low rate does not help homeowners with instant cash needs for retirement income, or unanticipated large expenses. He added that reverse mortgages could provide that upfront cash, but do not sufficiently protect the homeowner, and come with higher interest rates and restrictions.
Christian Lassonde, managing partner at Impression Ventures, who is joining Fraction’s board as part of the deal, was quoted to have said, “The Fraction team impressed us with their breadth and depth of experience in lending. Driven by a strong sense of purpose that aligns with ours, Fraction makes accessing home equity easy regardless of income, age or profession, fairly and transparently, strengthening an individual’s financial position.”
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