Fintech company Nesto will bring its online mortgage marketing platform to IGM, formerly Investors Group.
The start-up, which has existed since 2018, offers its nesto Mortgage Cloud platform to the financial group with $260 billion in assets under management, which thus becomes its first major client.
IGM offers a range of financial services including house mortgages. The finance company will now use Nesto’s online mortgage platform to market its own mortgages digitally.
“Canadian financial institutions are beginning to recognize the value of what we have developed and want to participate in it. IGM is the first client we bring to Mortgage Cloud,” says Malik Yacoubi, CEO and co-founder of Nesto, in an interview. He wants to see other financial institutions follow suit quickly.
Nesto will earn recurring revenue based on the volume of loans generated, based on revenue sharing with IGM.
What’s more, IGM is participating in a new round of 80 million raised by Nesto. The funding closed at a time when venture capitalists are showing greater risk aversion towards tech companies.
In addition to IGM, the financiers are BMO Partners and partners from previous rounds: National Bank’s NA Capital, Diagram Ventures, Portage and investors Michael Rowell and Michael Paulus. They are the two entrepreneurs behind digital insurer Assurances IQ which was bought by Prudential Financial in 2019 for US$2.35 billion.
“Both Michaels have expertise in converting customers on the Internet who want to use technology into purchasers of very real financial products,” says Mr. Yacoubi.
From virtual broker to digital mortgage lender
Nesto, which initially acted as a 100% digital mortgage broker, became a virtual mortgage lender in July 2021. “We wanted to offer the customer the best mortgage product and the best experience. Having to wait for approval from third-party lenders slowed down the process and negatively affected the customer experience. We now control the experience 100%”, says Mr. Yacoubi, to explain the shift.
Nesto says it disbursed $1.5 billion in mortgages in Canada in 2022.
“We want to help as many Canadians as possible with their mortgage. One way is to continue to offer competitive products under the Nesto brand. Another avenue is to make agreements with financial institutions like IGM and facilitate their digital transformation, and to offer better service,” explains Mr. Yacoubi.
To gauge the company’s prospects, The Press asked advice from the firm Gazelle.ai, which tracks companies that have the wind in their sails around the world.
“According to our high-growth companies scale, Nesto ranks among the top third of global companies we track that are most likely to grow over the next 18-24 months. It evolves in the fintech market which is growing and where there seem to be geographical barriers to entry and emerging players specific to each country”, analyzes Simon Leroux, co-founder of Gazelle.ai.
Nesto today employs 260 people. It moved its main office in 2021 to Maison Alcan in downtown Montreal. They were only 15 employees before the COVID-19 pandemic. The tech company plans to hire 80 additional people in 2023 with the IGM contract. Mr. Yacoubi did not want to reveal his turnover. The boss wants to list his company on the stock market next year, if the situation is favorable.