It's a challenging time for housing in the U.S.
That’s not a radical or new statement, but it bears saying outright—housing has long been a serious flashpoint for millions, and data for 2025 gestures towards a tricky time in the marketplace. As many Americans are struggling to afford homes, prices are estimated to increase by 3% as home supply remains tight, according to J.P. Morgan Research.
This means that the engine that powers most home purchases—the mortgage—is as important as ever. Long-simmering demand and slightly softening rates (at least, by the end of 2025) suggest that mortgages are poised for a surging year. According to the Mortgage Bankers Association, mortgage origination volume is estimated to hit $2.3 trillion, up from about $1.79 trillion in 2024. Total loan count is expected to be 6.5 million loans this year, a notable uptick from 5.1 million last.
The mortgage marketplace isn’t exactly known for being tech-forward—like insurance, the mortgage industry is essential, entrenched, and characterized by legacy technology. It also isn’t a space that’s attracting VC backing en masse. Though deal count and deal value for mortgage tech startups hit a recent peak in 2021—67 deals, $3.8 billion in total value per PitchBook—2024 saw deal count at 32, with total deal value at about $300 million.
But for the startups in the mortgage tech space, especially with this refinancing boom in the works, there’s opportunity. That seems to be true for Vesta, a mortgage infrastructure startup backed by (among others) Andreessen Horowitz and Bain Capital Ventures.
“In many ways, I think the mortgage industry would like to be less in the public consciousness than it has been in the last 15 years,” said Mike Yu, Vesta CEO and cofounder. “Because right now it's got a bad rap.”
There are some recent green shoots that the company disclosed to Fortune. Vesta's last public round was announced in 2022, a $30 million Series A, and Fortune can now report that the company has raised an additional $20 million from strategics. (The company declined to disclose investors in the round.) Additionally, Vesta says that, in the last year, the loan volume running through the platform has tripled, as has its new customer count. Those new customers will, when on-boarded, mark a 30x increase in volume running through the platform, according to the company.
Van Richardson, cofounder and CEO at Vesta customer Filo Mortgage, said that the industry has been in a "constant state of flux," but he’s optimistic about the future—in part due to new technological possibilities.
"The phrase ‘this is how it's always been done’ pops up a lot,” said Richardson. “We looked at technology partners that operated from that perspective, and it works to a certain degree, but doesn’t allow you to expand…We’ve been able to expand in ways we didn’t even think we could by leveraging technology like Vesta. We want to buck ‘the way it’s always been done’ and I think they also embody changing that narrative.”
Vesta is still in its early days, as the company was founded in 2020. And the beginning was especially slow.
"Getting the first customer was basically a year-and-a-half in,” Yu told Fortune. “They actually signed, and then went live about two years in."
As the company has signed more (and bigger) customers, the challenge has now shifted.
“Go-to-market in the early days is very much: How do you get your first early adopters to bet on you?" said Yu. “Right now, the hard execution challenge is very much: What's it going to look like to scale?”
Yu is well-aware he’s hunkering in for a long haul. But Vesta’s ability to come into the mortgage space and (with lots of work) sign customers like Richardson is its own indicator, Yu says, that the mortgage industry is ready for change—even if we won’t necessarily see it.
"If we're the most successful at our job, nobody will think about it,” said Yu. “The tech will just work.”
Scoop…At the end of February, Olympus Partners had raised $2.87 billion for its latest flagship fund, a person familiar with the situation said. The middle market private equity firm is targeting $3.5 billion to $3.8 billion for Olympus Growth Fund VIII, which has a $4 billion hard cap. Olympus plans to hold a final close in March, they said. —Luisa Beltran
Hark, an IPO!...CoreWeave filed its much-anticipated S-1 yesterday. Though red hot demand for AI has sent the company’s topline soaring more than 700% year over year, there are quite a few question marks for investors to ponder. Read more here.
See you tomorrow,
Allie Garfinkle
X: @agarfinks
Email: alexandra.garfinkle@fortune.com
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Correction, March 4, 2025: The email version of this letter misstated Vesta's funding raised to date.
