Fin News

The Long Tail That Wags The Dog

How Maxwell captured over $50 billion in annual mortgage volume and is leveraging AI to capture, consolidate, and optimize the $3+ trillion mortgage marketplace. 

Five years ago, Denver-based Maxwell set out to transform the mortgage industry. Today, the company offers a digital mortgage platform that empowers community lenders to optimize their operations. Managing over $50 billion in loans last year, the platform is expected to nearly double that volume to more than $100 billion in 2021.

This places Maxwell as one of the top 15 mortgage platforms in the country. To understand how they did it, you need to understand the power of long tail markets and the technology strategy of capture, consolidate, and optimize (“CCO”).

The most well-known example of long tail CCO strategy is Shopify. Ten years ago, common wisdom held that if big box retailers like Best Buy, Target, and Costco didn’t slowly destroy independent retailers, online tech giants like Amazon and would. SMB retailers did not have the resources to successfully compete online against large national footprints and huge technology budgets.

Where others saw inevitability, Shopify saw opportunity. By capturing, consolidating, and optimizing core ecommerce capabilities, Shopify could build a new technology first ecosystem sustained by the aggregate buying power of millions of small retailers. Together they would build a cutting-edge ecommerce platform provided on an affordable subscription basis. Shopify’s platform revived and accelerated the SMB retailer industry and put it on a competitive footing with tech giants. Today, the SMB retailer model is thriving online, and Shopify is a trusted partner valued at over $145 billion.

As FinTech specialist investors, we frequently hear people discuss the inevitable decline of legacy banks, savings and loans, and credit unions, particularly those in smaller markets.  But Maxwell saw an opportunity to build the Shopify of mortgage technology, and to deliver a cutting-edge digital and AI platform that streamlines and accelerates mortgage origination and underwriting for community lenders and their borrowers.

Maxwell’s AI automation leverages aggregated loan data and real-time data insights from across its network to streamline and accelerate the loan processing, underwriting, and approval process. This represents a significant technological benefit to community loan originators and their customers, with loans on Maxwell’s digital AI platform closing 50%+ faster than the national average.

The U.S. mortgage market represents $2.1 trillion in annual loan volume.  Community lenders represent 50% of that market by dollar volume, which is a massive TAM. For decades, the underlying fragmentation in this market has perpetuated a process that is frustrating, slow, expensive, and uncertain. Maxwell is fixing these problems and enabling a new future for community banks.

Fin VC co-led the Series B with TTV Capital because we think that Maxwell’s extraordinary growth is only beginning and that the company is uniquely positioned to transform the mortgage market and unlock an enormous amount of value in the process. We see Maxwell as a critical technology partner for community lenders around the country and a fundamental driver of transformation in the mortgage origination, underwriting, and capital markets industries.

Fin VC is excited to join the Maxwell Board, and partner with new investors Rotor Capital, Prudence Holdings, The Mortgage Collaborative, and existing investors Anthemis Group, Route 66 Ventures, Cantos Ventures, Thirdstream Partners, and Sovereign’s Capital.

We look forward to rolling up our sleeves and working closely with the Maxwell team to continue to expand their business over the coming years.