Figure Technologies Has Raised $103M for Digital Mortgage, Student Loan Refi

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December 3, 2019

Figure Technologies, the 2-year-old home equity lending startup, has raised $103 million of Series C funding.

The San Francisco-based company, led by SoFi's former CEO Mike Cagney, provides fixed-rate Home Equity Lines of Credit (HELOCs) in an all-digital process that promises borrowers decisions in less than five minutes and funding in less than five days. Its process is executed on its own blockchain, called Provenance, which allows Figure to speed up the application process and loan origination.

Figure plans to use the funds to continue building its products and integrating into their blockchain, Cagney told Cheddar Tuesday. The company filed a notice of an exempt offering of securities to the U.S. Securities and Exchange Commission on Nov. 4. TechCrunch reported on the filing on Monday.

"Everything we do is centered around blockchain technology to improve the process for everyone, whether it's a borrower, a lender or downstream capital market takeout, we're using blockchain to drive efficiency through the whole process," Cagney said. "With credit, we've demonstrated over 30 basis points of value, using blockchain from loan origination to financing to securitization. We think we can extend and apply that same kind of value in mortgage and student lending."

Figure launched its HELOCs service in October 2018 and expanded to mortgage and student loan refinancing this year allowing the company to compete more closely with SoFi, which was co-founded and led by Cagney and made its name as a student lending company. He left SoFi in late 2017 amid a sexual harassment scandal.

"We had cultural issues at SoFi, and I take accountability, responsibility for that," Cagney said. "[Figure has] put culture first from an organizational standpoint, and that was something that we didn't do at SoFi. We're building to a consistent culture, everyone's rowing in the same direction, and I think it's paid off very well for us."

He added that Figure has used culture as a competitive advantage that has propelled it to near-profitability in such a short period, which he said is a "testament to the organization, the executive team, and the board."

Cagney co-founded Figure with his wife, June Ou, who is chief operating officer and was previously SoFi's chief technology officer. Figure counts former FDIC chair Sheila Bair, former SEC chairman Arthur Levitt, Ribbit Capital's Meyer Malka, and former JPMorgan exec and enterprise blockchain star Blythe Masters as advisors.

Figure raised $50 million in April 2018 and another $73 million this February. Rather than using its latest funding for additional staffing on product teams, Cagney said it's more important that the company has the balance sheet to be able to support its products.

He added that the company is nearing profitability and expects it to be cash flow positive by early 2020.

Figure makes money from origination fees and selling some loans into the capital markets. It also owns 70 percent of the economic interest of its blockchain and is currently working with a slew of originators to onboard.

"Everyday fees are paid into Provenance and distributed out to investors," Cagney said. "It's unique as a crypto asset in the sense that its value isn't necessarily driven by scarcity, it's driven by the fees that are paid into the blockchain."

Earlier this year Figure closed a $20 million Reg D security token offering of its blockchain's security token, called Hash, to more than 100 accredited investors.

By the middle of next year, Cagney expects to grow its incremental asset classes, like lending for unsecured consumers and adding funds on its blockchain. He also teased some work the company is doing in Japan, Taiwan, and Singapore.

Figure's Series C was led by Morgan Creek Digital and included participation from DCM, Digital Currency Group, HCM Capital, MUFG Innovation Partners, Ribbit Capital, RPM Ventures, and The Partners at DST Global.