AI-driven single-click refinancing platform Sherlok lands $3.4m in VC backing

An Adelaide start-up that will soon allow mortgage owners to refinance with a single click has raised $3.4m in funding led by venture capital firm Rampersand.

Sherlok founder Adam Grocke: ‘We’ve been doing some sort of really early testing with brokers and homeowners and we’re now planning to go live in the second half of this year.’ Picture: Russell Millard

An Adelaide start-up that will soon allow mortgage owners to refinance with a single click has raised $3.4m in funding led by venture capital firm Rampersand.

Sherlok, which launched in 2019, has received the backing ahead of its plans to extend its instant refinancing solution which uses artificial intelligence to assess home loans and search for better rates.

“We’ve been doing some sort of really early testing with brokers and homeowners and we’re now planning to go live in the second half of this year,” founder and chief executive Adam Grocke said.

The start-up hit the market four years ago as a software-as-a-service solution targeting brokers which could, with a subscription from the broker, reprice a mortgage owner’s loan with their existing lender.

“It was essentially identifying when the customer’s loyalty tax became too high,” he said.

Following the launch, the start-up started working on refinancing loans with other lenders before launching the one-click solution.

“Previously we were generating refinancing leads for our brokers but the brokers had to manually process those,” Mr Grocke said. “Now we can essentially do data-driven instant refinancing to another lender with a single click.”

Alongside the subscription fee, the business charges the lender and broker a processing fee.

Sherlok used an artificial intelligence engine to analyse mortgage rates and provide predictions on the ability of a borrower to meet the criteria to refinance. It also provided predictions on when to contact a homeowner about their current load, Mr Grocke said.

Based on the start-up’s data over the past four years, Sherlok expects to see more than 60 per cent of its brokers taking up the new product, with each refinancing between one to two loans per month. But for now there isn’t a way for customers interested in using the service to find a broker which uses the platform. Mr Grocke said the service was meant to support brokers in keeping existing clients, rather than bringing new clients.

Investment principal Taryn Pieterse said Rampersand VC was impressed with Sherlok’s vision and that the fund believed his previous experience as a broker gave him a unique insight into the industry.

“This technology is built for brokers, by brokers, with a deep understanding of retention strategy, and the single-click refinancing solution represents a major step forward,” she said. “Property ownership is central to the Australian economy and culture, and in a rising interest rate environment Sherlok has built the platform that swings things back in the homeowner’s favour.”

The new capital would be used to expand the team of 14 people, with plans to hire new developers. The round also received participation from Investible VC.

In order to use the service, a broker’s client would need to consent to open banking.

Over the past 12 months, Sherlok had grown 700 per cent in usage. It had also begun to partner with broker associations and had formed a partnership with Australian Finance Group, a mortgage aggregator used by 3700 brokers across the country.

The start-up had seen more than 500 brokers use the service to get a price on a home loan, Mr Grocke said.

“We’ve got a second and third aggregator joining the platform in the next few weeks so we should have doubled in volume within the next six months,” Mr Grocke said.

Mr Grocke said he expected many borrowers upon launch.

“Sherlok is looking after about $70bn worth of home loans for brokers so the volume that will be going through our platform to refinance will become quite significant,” he said.