AI mortgage startup LoanSnap is grappling with a slew of lawsuits from creditors and has been evicted from its Southern California headquarters, leaving employees in a state of uncertainty about the company’s future. According to information obtained by TechCrunch, the company, founded by serial entrepreneurs Karl Jacob and Allan Carroll, has raised approximately $100 million in funding since its inception in 2017. Notable investors include Richard Branson’s Virgin Group, the Chainsmokers’ Mantis Ventures, Baseline Ventures, and Reid Hoffman. Additionally, LoanSnap has taken on about $12 million in debt, per PitchBook estimates.
Despite securing significant capital, LoanSnap has faced mounting legal challenges since December 2022, with at least seven creditors, including Wells Fargo, alleging that the startup owes them over $2 million. Legal documents reveal that LoanSnap has also faced fines from state and federal agencies and nearly lost its operating license in Connecticut. These legal entanglements have exacerbated the company’s precarious position, casting doubt on its ability to sustain operations in the near term.
Internally, the atmosphere at LoanSnap is described as dire by employees, who are anxiously awaiting clarity on the company’s direction. From December 2023 to January 2024, LoanSnap missed payroll, and its workforce has shrunk significantly. Once boasting a headcount of over 100, the startup now employs fewer than 50 people due to layoffs and attrition, according to sources. The ongoing turmoil is attributed to poor leadership and excessive spending, as echoed by a former employee who wished to remain anonymous.
The unraveling of LoanSnap raises critical questions about the judgment of its investors, who continued to pour money into the company as late as 2023 despite evident troubles since 2021. Reid Hoffman and other key investors have remained tight-lipped about their involvement and the startup’s future. The lack of response from Virgin Group, Mantis VC, and Baseline Ventures further deepens the mystery surrounding LoanSnap’s next steps. As the company navigates these turbulent waters, its future remains uncertain, leaving many to speculate on the eventual outcome.
