Inside Cloudvirga's deal to merge with Stewart Information Services

By the end of 2020, Cloudvirga had reached an inflection point in the company's five-year history. The firm needed to raise additional capital to continue on its growth path and it considered several options.

"As a startup you get to the point of your cash runway, and you look for funding so we were at a point where it was time to do that process," said Maria Moskver, president and chief operating officer of the mortgage point-of-sale technology provider. "So the board considered several alternatives, which was to continue funding the company, or to find a strategic partner."

Cloudvirga elected to look for a company to team up with, and hired an investment banker last year to start the process.

After going through a number of letters of interest, it decided to go with Stewart Information Services, a company that has itself been an active acquirer since the start of 2020. That was a key deciding factor for Cloudvirga, Moskver said.

"They're really interested in tackling the small to midsize lender with an end-to-end solution, that's their vision," said Moskver, adding that Stewart CEO Fred Eppinger took a similar path when he was president and CEO of The Hanover Insurance Group. "We thought it was a natural fit with what we were offering, and also given the fact that they were going to allow us to remain independent, to pursue our roadmap, to keep our current clients, all those things were appealing to us."

How Stewart allowed NotaryCam to operate following that transaction in December was brought up as a comparative model by a spokesperson for the title company.

Cloudvirga was founded in 2016 by Kyle Kamrooz, Mark Attaway and Bill Dallas, who is currently president of Finance of America Mortgage. Dallas Capital Management, a family office for the Dallas family for which Bill Dallas is the chairman, was a Series A round investor in Cloudvirga. Upfront Ventures also was involved in the Series A round, as was Tribeca Early Stage Partners.

The company had completed three fundraising rounds, raising $77.5 million in total from five investors, according to Crunchbase. The Series B investor was Incenter, which is now part of Finance of America.

The Series C round in May 2018 consisted of Riverwood Partners and Upfront Ventures and added $50 million in capital.

However, Cloudvirga did do a C-1 round in May 2020 that consisted of a convertible note from one of its stockholders, Moskver said.

But rather than trying to do another funding round, this direction makes sense for Cloudvirga, given where it was as a company, she said. Going public was apparently not a consideration.

In January, Cloudvirga announced its 2020 revenues were double those of 2019, and it expected to do similar for the current year.

With this deal, "I think we'll be able to accelerate our growth map because we won't have the constriction of funding, we'll be able to integrate more vendors into our platform including Stewart, offer more services potentially through the platform," Moskver said.

Cloudvirga will be able to approach Stewart's clients who aren't signed on to offer them its services and vice versa, Moskver said. "We do have some clients that aren't working with Stewart that I think are definitely attractive to them," she said.

Correction: A previous iteration of this article incorrectly stated that Cloudvirga bought Stewart Information Services when in fact the two companies merged.