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Mortgage Modernizer Raises $50M in Latest Capital Round

Irvine-based startup Cloudvirga Inc. has attracted big-name customers and backers as it aims to modernize a mortgage industry steeped in manual processes more than a decade old.

Last week the company, which makes software that automates the mortgage process, closed a $50 million series C round led by private-equity firm Riverwood Capital in Menlo Park, which has more than 25 investments in its portfolio.

Riverwood Principal Scott Ransenberg and Vice President Jay Schneider joined the Cloudvirga board as part of the transaction.

Santa Monica-based Upfront Ventures, Los Angeles’ largest venture fund with $2 billion under management, also participated in the round, believed to be the biggest in Orange County this year.

“We really wanted to accelerate our growth in the market and be an employer of choice in Orange County for tech talent,” Chief Executive Michael Schreck said. “We needed to have an investment of scale to support that.”

The company has raised more than $77 million.

It was founded by Chairman Bill Dallas, Chief Information Officer Mark Attaway and Chief Strategy Officer Kyle Kamrooz. Schreck, who’s led and served in various executive roles at fintech companies in L.A. and the Boston area, was hired last year.

Cloudvirga has attracted funding from institutional backers every year since it spun out of Calabasas-based lender Skyline Home Loans in 2016. The software maker raised $15 million last year in a series B round led by Incenter, a Blackstone Group portfolio company in Minnesota that’s grown into one of the largest providers of capital and services to lenders and financiers in the nation.

One of the country’s largest nonbank mortgage originators is also an investor, but Cloudvirga declined to name the firm, citing a nondisclosure agreement.

Its subscription software is touted as speeding up mortgage approval time by automating the initial disclosure process, including income verification, tax documents and assets.

Cloudvirga’s flagship intelligent Mortgage Platform, or iMP, supported about $17 billion in loan transactions last year from its growing customer base, which originated more than $100 billion in loans.

So there’s plenty of room to run, considering U.S. homebuyers generate about $2 trillion in mortgages annually. Mortgage debt hit nearly $15 trillion nationwide last year, including commercial real estate, according to statistics from the Federal Reserve.

Schreck projects more than 5,000 loan officers will use the Cloudvirga system this year, pushing revenue to nearly $20 million.

Growing Hub

The field is crowded with well-financed competitors, such as Black Knight Inc. and Ellie Mae Inc., and hot startups, such as San Francisco-based Blend—$160 million raised—and Roostify with $33 million in venture funding.

The latest developments closely follow a refinance boom fueled by years of low interest rates, and rising costs and lengthier cycles to produce loans, largely driven by newer federal rules and regulations imposed after the subprime mortgage crisis, which bubbled up in OC before it blew up across the country and then the globe.

Cloudvirga is another addition to OC’s developing fintech hub, home to Irvine-based Acorns Grow Inc., the country’s fastest-growing micro investing app, with more than 3.3 million investment accounts; AutoGravity, an Irvine-based company that provides auto financing through smartphones; and Foothill Ranch-based LoanDepot LLC, the second-largest nonbank mortgage lender in the U.S. behind Quicken Loans.

Cloudvirga, which employs about 130 companywide and 70 in Irvine, plans to boost hiring at its new headquarters at Jamboree Business Center, which can accommodate 150 workers.

“This is really a strong real estate ecosystem here in Orange County,” Schreck said. “I’m not sure there’s a better market for us to be in.”

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