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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 54 May 2023 F E A T U R E of building a sustainable business in the sector. There have been several cases where proptechs have raised significant capital with a "big idea" but have lacked the ability to navigate the complete ecosystem within mortgage and real estate. As many inves- tors are pushing their portfolio investments to find profitable growth, gaining traction quickly and getting the support from the ven- ture investor network can make a big impact. The implications of having knowledge- able insider investors are also critical to potential customers of these emerging companies. Given that many start-ups still ultimately fail, lenders and clients need con- fidence that their vendors have staying power and a path to being profitable. There have been numerous examples of start-ups run- ning out of capital more quickly than forecast and in the B2B business environment, this really jeopardizes the ultimate customer. Technology buyers want to avoid patron- izing companies that lack the wherewithal to survive market fluctuations and build a sus- tainable business. Buyers must understand the financial position of their vendors, as well as the goals and position of the capital sources for those investments. Lenders, too, should research the proptech companies they are partnering with, know where their capital is coming from and be comfortable building a direct relationship with that source of capital. Building a Successful Partnership through Commercialization G iven the nature of the industry, the complexity of real estate, and the need for inside knowledge of the ecosystem and key players involved, finding a venture partner with deep industry relationships is critical. A strong venture partner will ensure that the product solves specific gaps within the industry yet also interacts within the constraints of the incumbent technology companies, assist with the commercializa- tion phase of growth to scale the start-up's team and go-to-market efforts, position them with key customer accounts and facilitate strategic relationships to provide pathways for an eventual exit. For example, one of Rice Park Capital Management's (Rice Park) first investments was in Blue Water Financial Technologies (Blue Water). Blue Water was founded be- cause the market lacked digitally enhanced tools for identifying, trading, and hedging mortgage servicing rights (MSRs). Based on Rice Park's experience in MSR and the early stage of the company's evolution, we invested capital to support the team's growth and product development and made introduc- tions to what we believe to be key industry counterparts. Ultimately, because of our deep relationships in the industry, Rice Park was approached by Voxtur Analytics as a potential acquirer of Blue Water as Voxtur was seeking to build out their capabilities in the secondary market. We believe the key to this acquisition was Rice Park's ongoing partnership with Blue Water through the commercialization of their product and role leading the negotiations for the $101 million sale to Voxtur. We believe the future of proptech within the mortgage and real estate sector is bright. These companies serve an industry that is ripe for digitization and poised to embrace it—especially given current market dynam- ics. However, to usher in real disruptive innovations, these tech firms will need the financial support of lenders and venture investors that understand the needs in the marketplace, know how to collaborate with the gatekeepers, can manage the regulatory challenges and constraints, and navigate the many nuances of the mortgage and real es- tate industries. That is the best way to ensure proptech's long-term success. This information has been prepared by Rice Park Capital Management and is subject to change at any time without notice. While all of the information presented herein is believed to be accurate, we make no express warranty as to the com- pleteness or accuracy of the information. Past performance is no guarantee of future results. Rice Park Capital Management is an Investment Adviser registered with the U.S. Securities & Exchange Commission. This article does not constitute an offer to sell, a solicita- tion of an offer to buy, or a recommendation of any security or any other product or service by Rice Park Capital Management LP or any other third party regardless of whether such securi- ty, product or service is referenced in this article. Furthermore, nothing in this article is intended to provide tax, legal, or in- vestment advice and nothing in this article should be construed as a recommendation to buy, sell, or hold any investment or security or to engage in any investment strategy or transaction. Rice Park Capital Management LP does not represent that the securities, products, or services discussed in this article are suitable for any particular investor. You are solely responsible for determining whether any investment, investment strategy, security or related transaction is appropriate for you based on your personal investment objectives, financial circumstances and risk tolerance. You should consult your business advisor, attorney, or tax and accounting advisor regarding your specific business, legal or tax situation. Given the nature of the industry, the complexity of real estate, and the need for inside knowledge of the ecosystem and key players involved, finding a venture partner with deep industry relationships is critical."

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