Champion Lender

Growth Stage

Removing barriers to home ownership for minority communities

Analytics

Raised to Date: Raised: $137,449

Aggregate Commitments $

Platform

Republic

Start Date

04/26/2022

Close Date

11/11/2022

Min. Goal

$107,100

Max. Goal

$250,000

Min. Investment

$100

Security Type

SAFE

Funding Type

RegCF

Series

Pre-Seed

Valuation Cap

$12,750,000

Discount Rate

15%

Rolling Commitments $

Status
Funded
Reporting Date

11/27/2022

Days Remaining
Funded
% of Min. Goal

128%

% of Max. Goal

55%

Likelihood of Max
Funded
Avg. Daily Raise

$691

# of Investors

389

Momentum
Funded
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Location

Orlando, Florida

Industry

Real Estate & Construction

Tech Sector

Proptech

Distribution Model

B2B/B2C

Margin

High

Capital Intensity

Low

Business Type

High Growth

Champion Lender, with a valuation of $12.75 million, is raising funds on Republic. The company has developed an all-in-one platform to guide first-time home buyers through the entire process. The platform aims to remove barriers to homeownership for minority communities and make it easier for both lenders and borrowers. The HOME and HOME Pro apps of Champion Lender provide credit improvement, education and resources, cash to close, marketing, and other services to buyers and lenders. Viola Carmona founded Champion Lender in May 2021. The current crowdfunding campaign has a minimum target of $107,100 and a maximum target of $250,000. The campaign proceeds will be used to finish and launch the HOME app and SaaS platform, become licensed brokers in all states, acquire talent, and increase revenue.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$5,419,259

$3,979,616

COGS

$1,875,665

$985,711

Tax

$254,451

$157,875

 

 

Net Income

$251,540

$345,321

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$1,340,443

$1,872,477

Accounts Receivable

$781,578

$1,334

Total Assets

$2,125,964

$1,877,795

Short-Term Debt

$21,608

$49,038

Long-Term Debt

$0

$0

Total Liabilities

$21,608

$49,038

Financials as of: 04/26/2022
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Synopsis

The US housing market has been incredibly tumultuous lately. A severe shortage of homes coupled with rising home prices and high mortgage rates has made it very difficult for many Americans to buy a house. About 70% of millennials can’t afford a house thanks to rising prices. In 2018 – even before the pandemic sent the housing market spiraling – nearly half of adults 18 to 34 spent more than 30% of their income on rent. 

While many Americans are struggling to achieve homeownership, there are pronounced disparities between white Americans and Black Americans. About 72% of white Americans owned homes in 2020, compared to just 43.4% of Black Americans. In fact, Black Americans’ homeownership rate actually decreased between 2010 and 2020, while rates for all other racial groups increased. While there are a number of systemic factors driving this discrepancy, one of them is mortgage loan acceptance rates. Black mortgage applicants have a 7% chance of being rejected for a loan, compared to a 4% rejection rate for white applicants. 

Champion Lender is addressing this problem head-on. The company is developing a comprehensive home loan platform called HOME (which stands for home ownership and mortgage education) for minority homebuyers. As a web or mobile application, HOME offers educational content about applying for a mortgage and securing financing, plus tools for actually applying for and receiving a loan. On the other side of the business, Champion Lender also provides software for lenders to manage their loan application pipeline and provide financing for underrepresented homebuyers. With these tools, Champion Lender hopes to level the playing field for Black and brown mortgage applicants. 

Champion Lender’s current Republic raise has been rated a Top Deal by the KingsCrowd investment team.

Price

Champion Lender is raising capital via a Crowd SAFE at a $12.8 million valuation with a 15% discount. That’s a pretty fantastic price for a company with this level of revenue traction. Champion Lender brought in more than $5.4 million in revenue in 2021 and turned a profit of $251,540. Champion Lender has clearly been successful at generating income and minimizing costs for several years now, with a technology product in a market with a lot of potential. Therefore, a revenue-to-valuation multiple of less than 3x is very attractive. As a whole, Champion Lender’s price is a bargain for investors.

Market

Champion Lender provides mortgage software to both consumers and lenders. The global market for mortgage and loan software was valued at roughly $2 billion in 2021. It is growing at a decent pace, with an 8.3% compound annual growth rate projected between 2021 and 2027. 

However, Champion Lender’s actual addressable market is significantly smaller. For one thing, Champion Lender is focused only on the US and can only provide services in a limited number of states at this time. Additionally, that mortgage and loan software market quote also includes commercial loan software and other segments separate from Champion Lender’s consumer home lending product. In reality, Champion Lender’s total addressable market size is probably a good deal less than $2 billion. 

Despite a relatively narrow market, Champion Lender’s strategy of focusing on homebuyers underserved by traditional lending solutions can help it gain a strong foothold in the broader industry. Tailwinds are also in Champion Lender’s favor. Looking past the current housing bubble, 26 million Americans will likely look to purchase homes in coming years, particularly as the US works to increase housing supply. All in all, the company’s market prospects are decent. 

Team

Champion Lender was founded by Viola Carmona, a military veteran turned entrepreneur. Carmona served for almost five years as an Aviation Maintenance service member in the US Navy. She then spent two years as an operation officer at Elevated Perspective Marketing, a mortgage lead generation company. She launched the precursor to Champion Lender in 2014, which appears to have started as a sole proprietorship and turned into a smaller LLC brokerage firm before finally incorporating in 2021. She holds a bachelor’s degree in accounting and finance from Florida International University. 

Champion Lender indicates that there are two other executives on the team: Vice President of Technology Michael Facey and Vice President of Operations Nicholas De Luca. However, neither of them list Champion Lender on their LinkedIn pages, so they seem to work very part-time with the company. Facey has more than a decade of experience as a solutions architect, and De Luca is a military veteran, experienced finance professional, and real estate agent. 

The Champion Lender team is very small, almost unusually small for the company’s level of revenue. The only full-time executive, CEO Viola Carmona, is relatively inexperienced. It will be important for Champion Lender to hire more seasoned businesspeople as the company seeks to expand.

Differentiators

Champion Lender doesn’t offer a great many details about its product, so it’s tricky to fully compare it to existing lending tools. However, it does seem as though Champion Lender’s consumer-facing product is quite similar to other tech-enabled mortgage application services, namely Rocket Mortgage. Rocket Mortgage is America’s largest mortgage lender, with $320 billion in mortgages originated in 2021.

Champion Lender would argue that its product is differentiated due to its specific focus on minority homebuyers. Champion Lender helps to remove barriers for Black and brown mortgage applicants. The details on this are unclear, but it seems as though Champion Lender’s loan acceptance criteria is somehow more favorable to those applicants. If Black and brown applicants do indeed experience better outcomes from Champion Lender than from mainstream leader Rocket Mortgage, that could be an important competitive advantage for that demographic segment. 

Then there’s Champion Lender’s business-to-business (B2B) product, a portal for lenders to manage their origination businesses. There are a number of competitors in this space, including Qualia and Floify. Champion Lender doesn’t specifically address why its B2B product is better than these existing alternatives. The company’s primary differentiators seem to come from its consumer-oriented line of business. Overall, Champion Lender currently doesn’t seem to distinguish itself much from competitors.

Performance

Champion Lender’s financial performance is extremely strong. It is bringing in several millions of dollars per year in revenue. In 2020, Champion Lender generated more than $3.9 million in revenue. Income increased by more than 36% to hit $5.4 million in 2021. This quantity of revenue is frankly surprising. Champion Lender’s relatively sparse fundraising materials indicate a younger company with a lot of product development yet to be done, while these revenue figures paint an entirely different picture. 

Champion Lender’s financial success goes beyond mere revenue generation. The company has also been profitable for the last two years. Profit decreased from a $345,321 net income in 2020 to a $251,540 net income in 2021, but maintaining profitability is still impressive. What’s more, Champion Lender is bootstrapped, meaning that all of this income and profit were not artificially spurred by outside investment. Champion Lender has helped more than 500 homeowners secure mortgages to date. As of February 2022, the company also has 86 mortgage partners.

Champion Lender is a lucrative, profitable business that is likely to continue on its current growth trajectory with the launch of upcoming product expansions. At this valuation, investors would be hard pressed to find another company with financial metrics this stellar. 

Risks

Champion Lender is a relatively low-risk investment given that the company already has a live product that generated more than $5 million in 2021 revenue (profitably, nonetheless). The main source of risk is Champion Lender’s team. The company is led by a solo founder, which is always a riskier arrangement, and she is relatively inexperienced. Beyond that factor, investors may also want to consider a risk of the unknown. While Champion Lender’s financial metrics are extremely strong, those numbers seem incongruent with the company’s current level of product development and user traction (around 500 families served so far). Without more detail, there’s always the risk that investors can’t fully grasp the nuances of the business.

Bearish Outlook

Champion Lender is led by a very small and relatively inexperienced team. Hiring more seasoned professionals in sales, marketing, and finance will be imperative as the company grows. Second, Champion Lender’s differentiation from existing mortgage tools isn’t clear enough. This lack of detail could just be a failure of the company’s raise materials, or it could be a material issue that the company will confront over and over again. Finally, Champion Lender seems like it still has a long way to go before realizing its vision of an all-in-one mortgage platform for minority homebuyers and lenders. The company has only served around 500 families so far and will quickly need to scale to additional states and more users.

Bullish Outlook

The primary reason to be bullish about Champion Lender is the company’s financial performance and the price at which investors can buy into that growth trajectory. Champion Lender brought in $5.4 million in 2021 revenue (a 36% increase from 2020), and it turned a substantial profit of $251,540. Plus, the company is bootstrapped. This financial performance is pretty impressive for a young company with a small team and a product that still needs further development. 

Champion Lender’s biggest area of opportunity seems to be providing a platform that lowers barriers to home ownership for Black and brown buyers. If minority loan applicants can expect higher acceptance rates and more holistic evaluations of income and credit, it would be a no-brainer for them to borrow from Champion Lender instead of nationwide competitors. Champion Lender could easily command this market niche and generate a great deal of revenue, helping historically underrepresented homebuyers finance their dream homes along the way. 

Investors can claim a stake in Champion Lender for the low valuation of $12.8 million, which seems almost like a steal at this level of revenue. If Champion Lender can successfully launch differentiated, efficient software that scales mortgage lending for both homebuyers and lenders, investors in this round will reap the benefits.

Executive Summary

Champion Lender designed a comprehensive home loan platform, HOME, that gives minorities more equal opportunities to purchase a new home. The company’s all-in-one software tool for learning about and managing the mortgage application process is designed to empower Black and brown loan applicants with the tools they need to finance their home purchase. This is an important mission, given that Black homeownership rates have declined in recent years. Investors may be concerned that vague product details in the raise materials make it difficult to assess how Champion Lender compares to competitors. The team is also small, relatively inexperienced, and has only a single founder.

However, Champion Lender generated an impressive $5.4 million in 2021 revenue, with a positive net income of  $251,540. The company is bootstrapped and has managed expenses efficiently throughout the development of its platform for both homebuyers and their lenders. With a decent market opportunity and new product launches in the near future, it seems likely that Champion Lender will continue to grow this year and beyond. At a low valuation of $12.8 million, investors have a great chance to get in on a profitable, scaling company addressing an important issue. Therefore, Champion Lender has been rated a Top Deal. 

For questions regarding the KingsCrowd analyst report or ratings for this company, please reach out to support@kingscrowd.com

Analysis written on May 12, 2022.

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Champion Lender on Republic 2022
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Platform: Republic
Security Type: SAFE
Valuation: $12,750,000

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