One of the key underlying factors that led to the economic crisis in 2008 was excessive risk-taking by banks and much of this was facilitated by lack of data, governance, and outdated processes. In the wake of these events, a number of new regulations were introduced and new technologies were born. dv01 is a fintech platform that focuses on providing complete transparency around the structured finance market down to individual loan level detail. The platform also provides aggregate data around consumer loans, auto loans, student loans, credit risk, and mortgages. Presently, dv01’s data set features 75M+ loans and 600+ securitizations, representing $3.7T in lending activity.
AlleyWatch caught up with Founder, CEO, and restaurant owner Perry Rahbar to learn more about the company’s mission to address the fragmentation of data in the financial markets, the recent acquisition of Pragmic, and the company’s latest funding round, which brings the total funding raised to $34M.
Who were your investors and how much did you raise?
The round was a Series B3 and raised $6m. It was led by Pivot Investment Partners and AGNC Ventures, LLC, an affiliate of AGNC Investment Corp, joined as a new strategic advisor. AGNC Investment Corp. is a leading residential mortgage REIT with over $97 billion in assets and we’re thrilled to have them on board.
Tell us about the product or service that dv01 offers.
dv01 is the leading capital markets fintech driving technological innovation and loan-level transparency in structured finance. With a mission of bringing unparalleled transparency and intelligence to every loan, dv01 offers the world’s first end-to-end data management, reporting, and analytics platform tailor-made for lending markets–ultimately working to prevent a repeat of the 2008 financial crisis.
What inspired the start of dv01?
I kickstarted my career in CDO analytics at Bear Stearns and rose through the ranks to become a managing director for mortgage-backed securities by 25. However, with a front-row seat to the 2008 market collapse and recovery, I clearly saw that a segment of Wall Street, particularly the mortgage market, was littered with inefficient legacy systems.
If we are to have a responsible market, investors need transparent data and smarter workflows to better understand what they are buying. It was through this frustration as a mortgage bond trader that dv01 was born, and six years later, we’re still going strong in our mission.
How is dv01 different?
dv01 competes with incumbents that might individually offer structuring tools, collateral reporting, managed databases, advanced cash flow analytics or alternative data individually, but dv01 is the only company to provide all services as a one-stop-shop. We’re also the only provider to offer a market surveillance function, which gives user investors access to our entire library of CRT, non-QM, student loans, auto, and consumer unsecured loan data alongside world-class analytics and visualization tools.
Uniquely, dv01 also innovated a new class of service provider within securitization deals called the Loan Data Agent. When we operate as LDA in a securitization deal, we connect directly with issuers to make individual loan data available to all deal participants. Because we get paid out of the waterfall, investors get free access. It’s a big step in our mission to democratize data analytics for financial markets.
What market does dv01 target and how big is it?
dv01 is focused on data analytics for mortgage and consumer lending capital markets, which amount to $20T+.
What’s your business model?
As a service provider, dv01 receives overall revenue from its core suite of offerings via a combination of bps on collateral balance paid out of deal waterfall, bps on portfolio size, and annual contracts.
How has did the acquisition of Pragmic come together?
Charlie Oshman (cofounder of Pragmic) was meeting with VCs and, given dv01’s reputation in the industry, an investor asked me to meet with Charlie to help vet the opportunity. Charlie and Memo had previously cofounded commercial real estate data company Reonomy, and I was impressed by their impressive track record building proprietary technology, but it was our common goal—to solve the capital markets’ data fragmentation problem—that made combining forces perfect sense.
What was the funding process like?
This is our third time fundraising, and it was by far the smoothest. We reached out to our current investors and because they have such confidence in dv01’s future, it was really straightforward.
What are the biggest challenges that you faced while raising capital?
We want to be capital efficient and see profitability on the horizon, so our biggest challenge was that we didn’t have capacity for everyone.
What factors about your business led your investors to write the check?
It’s been six years since dv01’s founding and we’ve successfully executed our business goals. But what really impressed our investors is our resilience throughout the pandemic. Our business is closely tied to market activity and when securitizations abruptly halted, we discovered new ways to provide value to the industry.
What are the milestones you plan to achieve in the next six months?
Over the next several months, we’ll be executing on our ambitious roadmap: bringing our two new offerings to market; rolling out new features to Tape Cracker, a cutting-edge data wrangling tool for evaluating loan tapes; and expanding our footprint in non-QM, student loans, and auto.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Remain resilient to the market conditions and macro-environment, and also continue to prove value to your clients, investors, and employees.
Remain resilient to the market conditions and macro-environment, and also continue to prove value to your clients, investors, and employees.
Where do you see the company going now over the near-term?
We’re focused on penetrating new asset classes, like agency MBS and autos, deepening our footprint in those markets we currently support, and growing our team.
What’s your favorite outdoor dining restaurant in NYC
Sauce Pizzeria—and not just because I own it with my best friend!
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Source: https://www.alleywatch.com/2021/01/dv01-loan-lending-analytics-data-perry-rahbar/
