Rampersand Investment Notes: Sherlok
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With interest rates and mortgage pain in the headlines every day, we’re excited to announce our investment in Sherlok, the smartest mortgage AI in the business. Here are our investment notes on Sherlok’s $3.4m seed round, led by Rampersand.
You can read more about Sherlok’s raise in The Australian.
An ambitious founder with the belief that they can disrupt an industry for the better really grabs our attention at Rampersand. So when Adam Grocke, a veteran of the mortgage industry, built a simple-to-use AI-powered software solution that removes pain for all parties in the mortgage journey, we (alongside some of the largest players in the mortgage industry) were quick to take notice.
A Protracted Pain
Those who have gone through the process of trying to get the best mortgage rates will know that it is mindbogglingly cumbersome for borrowers and their brokers. It is hard for brokers to track a borrower’s changing circumstances, so there’s massive inertia in the industry that often leaves homeowners paying too much and brokers and lenders at high risk of losing dissatisfied customers.
Until now.
Adam Grocke (Founder and CEO) has experienced this problem throughout his entire career as a mortgage broker. He understands the psychology of a broker and the powers that govern the mortgage industry. A broker’s success relies on an ability to win new work coupled with ensuring clients are happy with existing loans.
Without Sherlok however, there has been no way to identify whose circumstances had changed or to efficiently check whether someone could be getting a better mortgage product.
After introducing the solution, Adam has been able to mobilise adoption across an industry that is notoriously ‘slow-moving’, with 700% year-on-year user growth. His ability to drive adoption demonstrated one of Adam’s major superpowers — attracting Sherlok’s key target users and partners.
Targeting the Needle Movers
Mortgage brokers are the stewards of over 70% of Australian mortgages, so giving them the power to predict churn and offer better client outcomes is a win-win. Sherlok’s technology ensures brokers can focus on adding new business without flying relatively blind in relation to existing customers.
In addition to serving brokers, Sherlok is helping the aggregators that feed them. Aggregators provide the CRM software and loan products that brokers leverage day-to-day, so partnering with Sherlok adds to their broker offering. Sherlok recently partnered with a leading aggregator, AFG, and saw 200+ brokers onboard within a month as a result. We expect that it’s a matter of time before other aggregators partner with Sherlok to improve their broker proposition.
Clear Customer Value
When it comes to disruption, there are often clear winners and losers. It’s very interesting with Sherlok that the common enemy shared between those in the mortgage industry is inefficiency and blind spots.
Lenders and brokers are aligned — they both wince when they lose a customer. When a customer ‘churns’, the bank loses its revenue stream, and the broker takes a hit on their present (and future) loan book. Both then need to make up the difference through new client acquisition, which can be very costly.
So Sherlok the interests of the borrower, the lender and the broker — which explains some of the astronomic growth.
Looking Ahead
Of course, things are only just beginning for Adam and Sherlok, with an incredible product vision. We don’t think Adam will rest until every Australian (and eventually everyone) is automatically on the best mortgage product available for them.
If you, like Adam, think you’ve got abnormal potential to shift an industry, get in touch with us via our website, Linkedin or Twitter.
