The five largest commercial real estate loans in NYC in 2021 exceeded $7.2B. Despite such financial stakes, the typical commercial real estate lending process had been incompatible with today’s modern reality. Traditionally, a borrower identifies a capital need, gathers documents, completes a loan application, diligence, and then approval or refusal at which point the borrower has to start the process all over again. The process takes months. Lev is a digital-first platform for commercial real estate financing that automates and modernizes this process, trimming it down to weeks instead of months. By leveraging technology, agility is introduced to the process by having borrowers and lenders input their financial details and preferences once while Lev matches compatible lenders to specific borrowers, eliminating the need to shop deals around manually and repeatedly. The company’s marketplace has closed $1B+ in loans in the last twelve months and features over 5,000 lenders nationwide. Lev recently own its own lending operations focused on non-recourse loans on single-tenant net lease properties.
AlleyWatch caught up with Lev CEO and Founder Yaakov Zar to learn more about the business, the company’s strategic plans, latest round of funding, which brings the total equity funding raised to $114.8M, and much, much more…
Who were your investors and how much did you raise?
We at Lev are very proud to announce $170 million in new funding. We closed a $70M Series B round led by Parker89 and Cross River Digital Ventures with participation from NFX, Canaan Partners, JLL Spark, Animo Ventures, Capital One, Citi Ventures, and Citi SPRINT, and StepStone Group. Alongside that, Lev has secured $100M in debt financing from Cross River’s Strategic Direct Lending Group. The new round brings Lev’s total funding to over $200M.
Tell us about the product or service that Lev offers.
Lev is the commercial real estate financing platform offering fast, transparent access to capital from the world’s leading financial institutions since 2019. We’re extremely proud to have closed nearly $1 billion in CRE mortgages in 2021. Lev has grown 10x year-over-year thanks to our proprietary approach to CRE financing, which includes the industry’s only digital offering. It’s been an incredible effort with some of the smartest people I’ve ever worked with, and I’m so excited for what’s next.
What inspired the start of Lev?
In 2018, my wife and I began the search for an apartment in New York where I learned first-hand about the residential mortgage experience. This sparked an interest in launching an online residential mortgage company, which quickly shifted once it became clear that there were already multiple digitized residential mortgage companies offering users a fast online experience, but no digitized experience amongst commercial real estate.
What I saw was a clear white space in the industry–the CRE space hadn’t evolved since the 90s, leaving a massive gap in the marketplace for streamlined and reliable CRE financing. Just like residential mortgages (think Rocket Mortgage), there seemed to be an automated experience in every industry, from food delivery to personal banking. The CRE space lacked a transparent and speedy deal management system, thus Lev was born.
How is Lev different?
Lev uses technology to create a faster, more seamless borrowing experience. Most CRE loans take 120+ days, with processes that are confusing and opaque. We’ve built technology that automates transactions, identifies the best lenders for a loan, and closes the deal quickly, which has incredible effects on the speed and flexibility that CRE investors have in acquiring new properties and managing their portfolios.
In fact, we just recently announced the launch of Lev Lending after noticing that lenders could be moving quicker if they had the right tools. So, we built a truly complete end-to-end lending experience with Lev Lending. The new service utilizes our existing AI and market expertise to give clients a top-down view of CRE financing from quote to close, specializing in permanent, non-recourse loans on single-tenant net lease properties. Lev Lending closes loans 3x faster than most lenders in the market. It’s been a hit so far, and we’re excited to keep building faster and bringing these experiences to more borrowers and lenders in the industry.
What market does Lev target and how big is it?
Lev targets the Commercial Real Estate (CRE) market, which in 2020 was estimated to hold a global value of $32.6 trillion.
What’s your business model?
Lev earns fees on deals handled by our platform.
What are your post-COVID office plans?
We believe in the unique relationship that humans develop when they are around each other. We have an awesome office in SoHo and are moving to a brand new, 30,000-square-foot office in the next few weeks. Though we hire the best people around the world, our NYC team enjoys working together in person and the majority of our sales, financing and operations Levers are in the office most days. We also host a quarterly on-site where everyone comes to NYC for a week, regardless of where they are usually based.
What was the funding process like?
Building a great company means having the right partners and the right resources to execute on your vision. We’ve been blessed from the earliest days to have an incredible group of smart and dedicated investors that believe in our vision and want to help us deliver on it. These same partners saw an opportunity for us to do even more, so we decided that the time was right to put additional capital into our next stage of growth.
What are the biggest challenges that you faced while raising capital?
I think there is a degree of market uncertainty, both in venture and in commercial real estate, that we had to take into account. Thankfully, our investors know that we are still in the early days of our business and there is tremendous opportunity to grow, so we came to the conclusion that right now is the right time.
I think there is a degree of market uncertainty, both in venture and in commercial real estate, that we had to take into account. Thankfully, our investors know that we are still in the early days of our business and there is tremendous opportunity to grow, so we came to the conclusion that right now is the right time.
What factors about your business led your investors to write the check?
I don’t want to speak for our investors, but I think they have seen our ability to execute consistently and with high quality, while providing an incredible experience for our customers over and over again. The fact that our clients come back to us for transactions, and the fact that our technology is market-leading, makes it clear that we are well-positioned to lead as the digital wave hits CRE.
I also think our investors are proud of the team we’ve built. As I mentioned, I’m surrounded by some of the most impressive talent I’ve ever met, and I have so much confidence in their dedication and focus on providing the best for our clients.
What are the milestones you plan to achieve in the next six months?
The next six months will be focused on increasing our investments in process automation and experience technologies to provide an even better experience for our clients. Our volume is quickly increasing, and I know that we can be doing more to help our clients close even faster with a higher certainty of execution on more optimized terms. We know what we need to do to deliver, and we’re throwing all of our weight and resources behind that.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
I think in this market, it’s important to be cautious and take your time. There is a lot of unpredictability in the venture market, and after several years of aggressive fundraising and intense spending, many companies need to adjust their cultures to be more deliberate in their expenses. Take your time, build something meaningful and find the right partners to help you grow.
I think in this market, it’s important to be cautious and take your time. There is a lot of unpredictability in the venture market, and after several years of aggressive fundraising and intense spending, many companies need to adjust their cultures to be more deliberate in their expenses. Take your time, build something meaningful and find the right partners to help you grow.
Where do you see the company going now over the near term?
Our goal both immediately and long-term is simple: continue to build the best digitized CRE lending and borrowing experience in the market. There’s not currently anything else like Lev available, and that’s because we’ve constructed the best team, platform, and network in the industry.
What’s your favorite outdoor dining restaurant in NYC?
I really enjoy eating at Abaita in Midtown with my wife and daughter!
