AI mortgage startup LoanSnap is facing a barrage of lawsuits from creditors and has been evicted from its headquarters in Southern California, causing employees to worry about the company’s future.
LoanSnap, founded by serial entrepreneurs Karl Jacob and Allan Carroll, has raised around $100 million in funding since its 2017 seed round, with $90 million raised between 2021 and 2023, according to PitchBook. Investors include Richard Branson’s Virgin Group, the Chainsmokers’ Mantis Ventures, Baseline Ventures, and Reid Hoffman, according to the company. The startup also took on around $12 million in debt, PitchBook estimates.
Despite the substantial capital it raised, since December 2022, LoanSnap has been sued by at least seven creditors, including Wells Fargo, who collectively allege the startup owes them more than $2 million. LoanSnap has also faced fines from state and federal agencies and nearly lost its license to operate in Connecticut, according to legal documents.
After raising $100M, AI fintech LoanSnap is being sued, fined, evicted https://t.co/b0gmajiOCb
— TechCrunch (@TechCrunch) June 3, 2024
While LoanSnap has not yet shut down, according to two employees, the atmosphere within the company is tense as workers await clarity on the company’s future. Between December 2023 and at least January 2024, the company missed payroll, and its headcount has dwindled. At its peak, LoanSnap employed more than 100 people. After layoffs and attrition, that number has fallen to less than 50, according to a source.
“The current state is a result of terrible leadership, overspending on futility, and institutional investors falling for the charming facade that Karl can show,” one former employee, who asked to remain anonymous due to fear of retaliation, said. The person’s identity is known.
Given the scope of the company’s problems beginning in 2021, the situation raises questions about why investors continued to pour money into the company as late as 2023 and what will happen next.
Reid Hoffman was not available for comment, and his office declined to comment. Virgin Group, Mantis VC, and Baseline Ventures also did not respond to requests for comment.
