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.

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. 

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.

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.

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. 

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.

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.

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.