(Photo by Jason Sherman)
Since the 2008 meltdown in mortgage lending, banks have been more hesitant to approve short-term construction loans. Private lenders have stepped up to provide this crucial financing for real estate development, and demand for these loans is growing rapidly. To capitalize on this opportunity, lenders need first-class, cloud-based software and services.
That’s what Lacoda provides.
“We call it ‘loan management made awesome,’” said Lacoda cofounder Josh Matthias, 32, of Washington Square. Lacoda integrates bookkeeping, invoices and reporting into a single comprehensive product for small private money lenders, with a focus on real estate construction loans. The company is based out of Venturef0rth, a coworking space in the Callowhill neighborhood of Philadelphia.
This reporter recently sat down with Matthias for a Q&A session along with a follow up email session from the team.
Realistically, why is Lacoda better than the other options available on the market?
There are a few other companies that do provide loan management software, however, Lacoda is the only one that is completely cloud based and specifically tailored to the needs of small private lenders. Lacoda is better than its competitors because it is completely web based, built with open source technologies and available with no upfront costs.
What was the aha moment when the founders decided to start building the platform?
When I [Josh Matthias] moved back to Philadelphia after college, my cousin Matt [Crane] approached me about helping him with a problem he was facing with his lending business. His business was doing really well: he was closing a lot of loans but did not have enough time to handle all of the bookkeeping and paperwork himself.
Other loan management softwares have large upfront licensing fees and are not web based, and the majority of these products are too expensive and not flexible enough for small lenders. So, I built a database to keep track of the loan balances and interest calculations, and a website for posting loan opportunities. As the business grew, we continued to add more and more features to the database. It was not long after, that Matt showed this software to some other lenders and they all wanted to purchase it. We realized there was a need for flexible, web-based loan servicing software, with a pay per loan model that was tailored to the needs of small lenders, and Lacoda was born!
What kind of user traction and data are you getting?
Lacoda is currently working with four lenders in the region, gathering information on how their businesses run and how to make Lacoda the best software for the industry. In addition, Lacoda is already being used to service the complete loan portfolio of Havestock, Inc. (Editor’s note: Havestock is a lending business also run by Lacoda cofounder Matt Crane.)
Are you fundraising, and if so, what can you say about the process?
Lacoda is currently self-funded.
What has been the most challenging part of running the company?
The most challenging thing I have come across is balancing the business side of things with my preference for coding. I’d prefer to spend my time programming and working with the engineers, but I know at this stage it is really important to get our software in front of potential customers.
What do you like about running the company in Philadelphia?
For one thing we’ve found potential clients in all directions, Philadelphia is centrally located in the mid-Atlantic region and that alone has made it easy for us to meet with clients in person.
Philadelphia also has a large market for the type of lenders Lacoda is designed for. There are many rehab construction loans in this region, which is very different from the West Coast, where you rarely see this type of rehab construction. Philadelphia also has an incredible tech community. I’ve learned a lot from many of the programmers and engineers that are based here in Philly. The community of entrepreneurs also makes Philadelphia a great place to start a business. It is a very supportive community, that is approachable and eager to provide advice.