Elio Mortgage has raised $5.1 million in pre-seed funding and bought Florida-based Hightide Mortgage, giving the startup an operating brokerage as it develops AI tools for loan officers, the company tells This Week in Fintech exclusively.
The New York-based, AI-native mortgage origination platform emerged from stealth on Tuesday with the announcement. Motive Partners and early Robinhood investor Social Leverage co-led the round, with Jeff Horing, co-founder and managing director of Insight Partners, participating as an angel investor.
The founders did not disclose what they paid for Hightide or how much of the funding went toward the acquisition. But they did say that since its January inception, Elio Mortgage has grown to approximately 40 loan officers and $200 million in trailing 12-month origination volume.
Why buy a brokerage?
Elio was founded in January by CEO and co-founder Oren Michaely and chief operating officer Arad Lev Ari. Friends since childhood in Israel, the two came to the mortgage industry from different backgrounds. Lev Ari worked in investment banking at Deutsche Bank and in real estate investing at KKR. Michaely worked in AI research at Microsoft and later was director of AI at Motive Partners.
Lev Ari told This Week in Fintech in an interview that the repetitive work he encountered in real estate led him to look closely at the technology available to the industry. The founders settled on mortgages but decided against selling software to existing lenders or brokerages.
Buying Hightide gave Elio a working brokerage, with loans moving through its systems and loan officers dealing with borrowers, lenders and the other parties involved in a purchase. The founders said engineers and loan officers work together so the company can build and test its tools around the work of closing a loan. Elio has no further acquisitions planned for now and instead intends to grow the brokerage it bought.
The acquisition also put Elio in direct contact with the industry’s rules and paperwork. The company is licensed in 22 states and expects to reach 30 by the end of the year, which the founders said would cover roughly 80% of the U.S. population.
The licensing process can be tedious, they said. For example, for a California application, Lev Ari said, the team had to mail in ink fingerprints. A credit-report provider required the brokerage to obtain a Yellow Pages listing before approving it to pull borrowers’ credit reports.
“Getting licensed in all these states is just such a time suck,” Lev Ari said. Purchasing High Tide gave it a start since the brokerage was already licensed in two states.
“Finding the right partner took months of conversations with brokerage owners,” Michaely told This Week in Fintech. “Acquiring HighTide gave us the foundation of a live mortgage operation and a team of eight loan officers to build alongside.”
More importantly, acquiring a live operation let Elio put its new operating model and technology into practice with real loan officers and real loans from day one, he said.
“Bringing loan officers and engineers together gives us a tight feedback loop to build, test and refine the technology around the realities of originating a mortgage,” Michaely added. “Rather than starting with assumptions about how a mortgage company should operate, we've been able to focus on the outcomes we want to achieve and design the technology and operating structure together around them.”
The startup is just one of many focused on the mortgage space, which counts publicly traded Better as one of its more high-profile players. AI mortgage broker Ralo, which was founded by former Google employees, raised a $2.9 million seed round in June. And in March, RenoFi announced it closed a $22M Series B funding round, but it is focused on financing renovations rather than purchases. Most other digital mortgage companies raising capital focus on providing technology to mortgage lenders rather than dealing directly with borrowers.
Image credit: Elio; Co-founders Oren Michaely (CEO) and Arad Lev Ari (COO)
A brokerage built around loan officers
Elio has 11 employees, most of them in engineering and product roles, with others in operations and sales, the founders said. Its loan officers work across the country, with a strong presence in Florida and Texas, and are contractors. Most employees are in New York, while the company also has a presence in Miami.
The loan officers bring in customers through their own networks. Elio then helps find a suitable mortgage from a group of about 50 lenders. When a loan closes, the brokerage earns a commission and pays a portion to the officer who brought in the customer.
“Our initial focus is really on the loan officer who generates the lead for us,” Lev Ari said.
In its early days, the company is building AI-powered software to coordinate the steps between a borrower’s first inquiry and a funded loan. Those steps involve loan officers, lenders, underwriters, real estate agents, appraisers and title companies, who often exchange information as a file passes from one party to another. Elio says it is developing AI tools to handle some of that coordination so that loan officers can have more time to advise customers and bring in more business.
“This is not to replace loan officers,” Michaely said. “It’s to empower loan officers.”
The founders have set an ambitious productivity goal. An officer working without assistance might close five to 10 loans a month, while Elio’s vision is that its tools could eventually help an officer close 50 to 80 loans a month.
Looking ahead, the startup also wants to provide mortgages through businesses or individuals whose clients may need one, including financial advisers, real estate agents, homebuilders and companies that own or manage rental homes. For example, an adviser could refer a client to Elio and follow the mortgage’s progress without running a mortgage operation. Elio would handle the loan and earn revenue when it closes.
Investor POV
Harsh Govil, a partner at Motive Partners, said he was attracted to Elio because he viewed it as a “strong, credible team attacking a large, structurally under-digitized market.”
“That is exactly the setup we look for at the earliest stage,” he wrote via email. “...Independent mortgage brokers now originate roughly a fifth of the $2.4 trillion in annual US mortgage volume, yet the industry remains highly fragmented and still runs on manual, paper-heavy processes.”
Most mortgage tech remains focused on point solutions like document processing, underwriting, or pricing, and stops there, added Govil.
“Elio's approach is structurally different: because they own and operate the brokerage,” he wrote, “they can rebuild the experience for borrowers and loan officers while improving the economics and operations underneath it.”
Growth and the rate question
For now, Elio is focusing on providing home-purchase loans rather than relying heavily on refinancing, which tends to decline with higher interest rates. (Currently, interest rates for a 30-year-fixed-rate mortgage hover just above 7%).
Overall, the founders acknowledged that high interest rates remain a concern. At the same time, the slower mortgage market helped them buy Hightide at what the company considered an attractive price, Lev Ari noted.
“It’s a cyclical business,” he said.
For now, Elio is recruiting loan officers through sales outreach and marketing while continuing to develop its technology inside the brokerage.
Elio said the round will also support product development, licenses in more states and the recruitment of loan officers.
