Metechi, a refinancing platform for distressed assets such as real estate, has completed a $5 million funding round. A number of leading angel investors participated in the round including Brack Capital Group Co-Founder Shimon Weintraub as well as Zion Kenan and Ari Pinto.
With more than $230 million of deals already active on Metechi’s lending market, the platform has begun to gain traction. Its Commercial Lenders Marketplace is used for buying, selling, and syndicating commercial loans such as CRE, C&I, and NPLs (nonperforming loans). The minimum deal size stands at $20 million, with a minimum ticket size for buyers of $5 million. By splitting debt into tranches, sellers can maximize uptake, while maintaining confidentiality; all participants are pre-screened and purchasers must be qualified.
Leveraging AI to Repackage Debt
Metechi’s debt trading platform utilizes AI to automate processes and optimize bidding. The company will now seek to further enhance these capabilities following the successful completion of its funding round.
“With our proprietary technology, we empower brokers to sell more NPLs with much less effort,” explains Metechi Co-Founder and COO Keren Goshen. “This is why we can reduce our buyers’ fees from an industry-rate of 5% to only 2% while remaining free for brokers and sellers.”
The effects of the pandemic that shook up 2020 have extended to the debt market, where commercial real estate in particular has felt the effects of the shift to remote working and stay-at-home orders. In the US, distressed real estate is overseen by financial giants such as JPMorgan (NASDAQ:JPM) and Wells Fargo (NYSE:WFC).
Metechi is taking on the titans at their own game by enabling property-owners and developers to interact directly with investors. With Metechi charging a flat 2% fee, sellers can maximize the value of their assets while keeping overheads to a minimum.
US Commercial Real Estate Market Falters
While the coronavirus has struck a blow to landlords and property developers, it’s sparked a thriving market for refinancing brick-and-mortar premises that now stand vacant. Although a full return to pre-pandemic normality is not expected, despite the arrival of a vaccine, it is anticipated that demand for commercial real estate will pick up in 2021. In the meantime, property owners facing a cash crisis have the option of utilizing marketplaces such as Metechi to obtain the liquidity they seek.
The company’s Commercial Lenders Marketplace is populated by developments in New York and Los Angeles, and ranges from apartment buildings to office towers. While many projects are already constructed, others are under development, with the sellers seeking to issue debt notes that will provide the funds to complete the work.
Small businesses like Metech can’t compete with the economies of scale enjoyed by the large financial institutions – but they can compete for fees and efficiency. Its technology enables small banks, brokers, and private investors to access regular dealflow for buying and selling nonperforming loans, and to negotiate favorable terms.
Disclosure: No positions. This Op-Ed is written by Reuben Jackson. Insider Monkey News Department isn’t involved in the production of this article.