Mike McFadden said his startup OptiFunder had a good feeling it would find its way onto the Inc. 5000 list for 2023, the first year it was eligible for the ranking of the nation’s fastest-growing private companies.
But OptiFunder didn’t just make this year’s Inc. 5000. It found itself near the top of the list, with revenue growth from 2019 to 2022 of 4,767%, ranking No. 98. That made it the second-highest St. Louis company on the ranking, trailing only Birch Creek Energy, as well as the highest-ranked local technology startup on this year’s Inc. 5000 list.
“We had our eyes set on the fastest-growing mortgage tech company, which we got,” said McFadden, founder and CEO of OptiFunder. “That’s really what we were hoping for. To be able to put that under our belts, that’s obviously good recognition for the (team) and what we’ve been able to do for clients. It speaks to all the hard work.”
Founded in 2019, OptiFunder has developed a technology system that provides an algorithm to optimize where non-bank mortgage originators in the residential mortgage industry fund their loans. It says its technology also includes automation software that assists in finalizing deals between mortgage originators and their so-called warehouse lenders (which provide originators with a line of credit).
McFadden said the company’s revenue growth is a testament to its ability to sign on customers and help them save costs and automate operations. He said OptiFunder has put a focus on signing top 20 mortgage originators in the U.S. and has several of them as customers of its technology. The startup’s local customers include USA Mortgage and Delmar Mortgage, McFadden said.
OptiFunder’s rapid growth comes as the mortgage industry has faced a slowdown with interest rates reaching their highest levels in years. The 30-year fixed mortgage rate is averaging 7.23%, as of Aug. 24, the highest average rate since 2001, according to Freddie Mac. McFadden said he believes OptiFunder still has the ability to grow in the current economic conditions, pointing to the startup’s technology and its focus on creating cost optimization and workflow automation technology for mortgage originators.
“In today’s market, when companies are looking to scale back employees and they’ve done multiple cuts, we give them automation tools that can kind of replace some headcount if they need to,” McFadden said.
Additionally, McFadden said OptiFunder since its launch has sought to be intentional about its growth strategy, seeking not to expand beyond its means.
“Since day one, I’ve run the business somewhat cautiously,” he said. “We want to ensure we’re doing the right things and we strive to be profitable every single month, and we’ve been able to do that and we expect to continue that. We’re going to run business like we always have. We can’t change the market landscape, but if we do the right things, we will be fine.”
OptiFunder has been backed by venture investment, raising $25 million in 2021. Because of its ability to operate profitably, McFadden said he doesn’t expect the startup to seek out additional funding in the near term.
McFadden said OptiFudner's growth strategy will continue to focus on enhancing its technology and signing on and retaining customers. He said the startup also envisions future products focused on credit unions and warehouse lenders themselves.
OptiFunder has about 45 employees and operates largely with a remote team, which McFadden attributes to its hiring growth during the Covid-19 pandemic. About a handful of its employees are based in St. Louis, and its headquarters are at 7777 Bonhomme Ave. in Clayton.
