Fraction Technologies Inc. (“Fraction”), is announcing that it has raised C$289 million in a combination of equity and debt financing from Impression Ventures, Primetime Partners, Global Founders Capital, and Panache Ventures, among others.
It will use this funding to launch in Canada, expand its team and technology platform, and prepare for its launch in the U.S.Â
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Fraction offers a digital platform that provides socially conscious financial solutions. Its flagship product, the Fraction Appreciation Mortgage is the first of its kind in North America.
The Fraction Appreciation Mortgage enables homeowners to access the existing value locked in their homes to increase their income or cover unexpected expenses. In contrast to products such as home equity loans or traditional mortgages, the Fraction Appreciation Mortgage has no monthly payments, and instead offers a reasonable interest rate payable upon the sale of the home, or when the homeowner decides not to renew.
Pre-launch interest has been exceptional, with over $20 million in demand from interested homeowners.
“Fraction aligns its interests with the homeowner. Upon sale of the home, if the home value appreciates, Fraction shares in the upside, but if the home value decreases, there is a protected downside, which helps homeowners preserve their home equity,” said Hayden James, CEO and co-founder of Fraction. “With over $20 trillion locked in home equity in the U.S. and Canada, no homeowner should be strapped for cash, struggling to pay for their child’s education, unable to pay bills during retirement or unable to help a loved one who has lost their job due to the pandemic. It is a common story to own your home but be barely able to afford anything else.”Â
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Despite historically low mortgage rates, additional debt is risky for homeowners, particularly for older adults hoping to age in place.
“Refinancing a mortgage with a low rate does not help homeowners with immediate cash needs for retirement income, or unexpected large expenses,” said Rayan Rafay, COO/CFO and co-founder of Fraction, who previously served as CFO/COO and Chief Investment Officer at Unison. “Reverse mortgages, can provide that upfront cash, but do not adequately protect the homeowner, and come with higher interest rates and restrictions.”
“Qualifying for a Fraction Appreciation Mortgage is more straightforward than for current products available in the market. We created Fraction to make it fast, easy, and transparent to access your home equity,” said Josh Baker, CTO and co-founder of Fraction. “We also work hand-in-hand with mortgage brokers and other financial advisors to provide a personalized, high-service experience.”
“The Fraction Appreciation Mortgage is ideal for older adults eager to age in place, but who are faced with insufficient retirement funds to cover the cost of their healthcare and other expenses,” adds Abby Miller Levy, Managing Partner of Primetime Partners. “The Fraction team has designed the most consumer-friendly home equity product in the industry and is eager to help millions of homeowners remain in their home with financial peace of mind.”
“The Fraction team impressed us with their breadth and depth of experience in lending. Driven by a strong sense of purpose that aligns with ours, Fraction makes accessing home equity easy regardless of income, age or profession, in a fair and transparent manner, strengthening an individual’s financial position,” says Christian Lassonde, Managing Partner and Founder at Impression Ventures. “Homeowners can now better situate themselves in retirement, or use the funds to support their next generation, without having to leave their home or put it at risk.”
Fraction’s team includes North American fintech leaders such as COO/CFO and co-founder Rayan Rafay, previously CFO/COO and Chief Investment Officer at Unison, and outside-General Counsel Sara Priola, who was previously a co-founder at the fintech unicorn, Figure.Â
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