Real Matters president and CEO Jason Smith knows mortgage banking technology. He’s spent 20 years in it, after all—although completely by accident.
Smith stumbled into the mortgage banking industry. “I don’t think many people actually go to high school and dream about getting into mortgages, but the reality is that the industry is dynamic, it drives our economy and has provided me a very fulfilling career” he explained to Techvibes in an interview.
The focus of Smith’s career has been to help banks drive cost and time out of the mortgage process through technology, whether it be software applications or using technology and data to make functions of the mortgage process more efficient.
Smith’s previous business, Basis100, had an $800 million market cap on the Toronto Stock Exchange at its peak. It was sold in 2004. After taking nine months off fly-fishing, Smith was itching to get back at it and revisited the mortgage process to see where he could find more “pain.”
Markham’s Real Matters found that pain in the physical real estate appraisal business. Banks were spending $5 billion per year on appraisals, making it their second highest cost next to salaries and staff. And with slow turn times and poor quality appraisals, it was clear the appraisal process was broken.
Part of the Greater Toronto Area, York Region and its local municipalities including Markham, Richmond Hill, Vaughan and Newmarket, are home to 3,900 Information & Communications Technology (ICT) companies, making it Canada’s highest ICT industry concentration and the leading Enterprise Solutions technology cluster.
Founded in 2006, Real Matters built technology to create a competitive marketplace where appraisers could state their rates and be measured on their speed of delivery and quality of reports. At it’s core is redihive, a cloud-based environment that connects a network of 24,500 independent real estate appraisers and insurance inspectors. Business verticals Solidifi (appraisals) and iv3 (property and casualty insurance inspections) provide complete property information services.
Real Matters expanded to the challenged US mortgage market in 2008 and within two years had 18,000 independent appraisers south of the border completing for business on the platform. Although up against multi-billion dollar competitors, Real Matters is now the fourth largest provider of appraisals in US.
“Jason and Real Matters is a great example of an entrepreneur and a company that does not waste a minute of its time thinking about being from Canada as limiting its potential. The company has built a great team, had tremendous success in the US market and raised plenty of capital to accelerate its growth plan” says Chris Chapman, National Leader, Growth Companies within KMPG’s technology practice.
But Real Matters is far from done in America. Average turnaround time of appraisals in Canada is 2.5 days, while in the US it is double that. And an appraisal in the US is also twice the price as in Canada. So the American opportunity for Real Matters remains huge.
While it is very unusual for a Canadian financial technology firm to succeed in the US, it doesn’t surprise Smith. “We have some of the brightest people that have come to Canada from all over the world right here, and I can’t find another marketplace where I can get access to innovative, smart, ambitious technology workers as I can get right here,” he says. “California certainly has them in it but you’re competing with every other major tech company in that marketplace.”
“The other interesting thing about Ontario and this general region is that it is also a financial services hotbed in Canada, you’ve got this mix of people who have experience in the financial services sector and experience in technology,” Smith adds. “you bring those together and you have a unique recipe for domination.”
Earlier this year Real Matters raised $22 million of common equity and debt facilities to continue its organic growth. It was also named one of Canada’s 50 Best Managed Companies and among the three fastest growing Canadian technology companies. Revenue growth of 8,961% from 2007 to 2011 tends to standout.
Real Matters is doing over $100 million in revenue annually but they’ve got a long way to go until he takes off to fly-fish again.
“We’ve got a billion BHAG for the business,” he affirms. “This is potentially a billion dollar company. The market is that big.”