Valon completes Series D with a valuation of $2.3 billion

Mortgage service software company Valon has completed a $150 million Series D funding round, with a valuation of $2.3 billion, doubling from the previous round. New investor Ribbit Capital has joined, while existing investor Andreessen Horowitz continues to participate. The company states that the funds will be used for product development and hiring, covering positions in engineering, product, deployment, and sales, with locations including New York, San Francisco, and remote.

Founded in 2019, Valon aims to replace the servicing systems behind approximately $13 trillion in consumer mortgage debt. Co-founder and CEO Andrew Wang discovered during his mortgage investment work at Soros Fund Management that trillion-dollar funds still operated on 1960s infrastructure, often leading to discrepancies. He and Linda Du chose not to sell software initially but to apply for licenses themselves, becoming a regulated mortgage servicer. Wang mentioned that he spent 18 hours a day for six months reading federal and state regulations before coding them. They refer to the licensing process as taking three to five years.

As a self-operated servicer, Valon has processed over 850,000 loans with an outstanding principal of approximately $196 billion, achieving efficiency about three times that of traditional servicers. In August of this year, the servicing business was sold to Carrington Mortgage Services, which has integrated ValonOS as its core platform. Valon subsequently shifted to selling software. Within six months of external sales, it secured contracts with an annual recurring revenue exceeding $200 million.

Current clients include Carrington and ServiceMac, which the company claims is the fourth largest residential subservicer in the U.S. Newrez, under Rithm Capital, has signed a contract to migrate over 4 million loans to ValonOS starting in 2027, which a16z states is close to 10% of the market. The company also claims that one in every six outstanding U.S. mortgages has signed up to use ValonOS, with two of the top ten servicers already operating on it. The system covers loan data, investor reports, compliance logic, and fund movement, with AI agents handling homeowner emails and escrow analysis.

Wang mentioned in an a16z podcast that the next steps focus on long-tail service tasks, voice interfaces, and more segmented customer experiences. He also described large institutional deployments as change management, not just technology implementation. a16z is currently recruiting deployment strategists for Valon in New York and San Francisco.

This revenue from contract income is derived from replacing servicing systems, not from new mortgage issuance. Buyers are large servicers that no longer want to maintain legacy systems, while the seller, Valon, first proved efficiency with its self-operated portfolio before selling it. The $150 million will go towards product development and deployment, with over $200 million in annual recurring revenue coming from institutions like Newrez, Carrington, and ServiceMac that are migrating platforms. Valon benefits from having access to system records, while older service software that relies on 1960s mainframes and manual reconciliation faces pressure.

Source: Public Information