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Why We Invested: Payscore

Payscore delivers the truth about applicant income via market leading integrations and completion rates.

This week, we are diving deeper on our Q1 2023 investment in Payscore (formerly The Closing Docs).

Tldr; Payscore is a B2B automated income verification solution for residential and multifamily property management companies (PMCs) and tenant screening companies. The company is exceeding our initial expectations and winning clients at a very fast clip. Payscore delivers the truth about applicant income, reducing onsite team workload, accelerating occupancy, and eliminating a major source of fraud. If you are in the single family or multifamily housing business, you should reach out to their team to discuss your applicant income verification process.

Is income verification still an issue for property owners?

Payscore addresses issues with conventional applicant income verification by offering a cost-effective SaaS product that verifies income by reporting deposit history. This unique strategy allows them 100% bank-verified analyses with a completion rate of 98% (versus the industry standard of 30-65%).

The above notwithstanding, given our collective experience in real estate, we were initially very skeptical of Payscore’s value proposition. With many of our LPs coming from the mortgage world, we were well aware of the list of 32 vendors approved for income verification reporting by Fannie Mae. Additionally, given the hundreds of millions of dollars raised from the likes of Ocrolus, Snappt, Finicity, Findigs, DecisionLogic, Argyle, Truework, Empinfo, and a host of others, it seemed unlikely that a true need remained outstanding in the rental space.

Given these considerations, we were pleasantly surprised when we independently validated the key drivers of Payscore’s value prop:

40% of the 48M rental units turn over annually, with an average of 3 applications per vacancy. Onsite teams spend over an hour validating income for every applicant.

  1. The majority of landlords (both single family and multifamily) in the US still validate income manually and/or with a document based solution.

  2. Most of the automated income verification solutions in use have a success rate under 60%, are prohibitively expensive, and/or still require manual document uploads on the part of the applicant or property management staff. The document-based approach is particularly fraught with challenges as fraudsters have become increasingly sophisticated at outsmarting AI-based flagging systems and will continue to leverage new advances in AI-generated images.

  3. Despite the plethora of income verification solutions in the market, income fraud began to spike during the Covid-19 pandemic and has continued to be a large pain point for owners and operators.

  4. Most property owners and income verification solutions have trouble incorporating non-W2 income into their assessments in a reliable, equitable manner. Addressing these nontraditional income sources is imperative given that roughly 36% of the U.S. workforce is involved in the gig economy (~60M people).

So, yes, income verification is still a significant problem for property owners and operators.

Can this business really “return the fund”?

One of the well established guidelines in venture investing is that the distribution of successful startups follows a power law curve. As a result, the majority of a fund’s returns are driven by 1-2 investments that are outsized winners to make up for all of the losers. Say a fund places 20 investments over a 4 year period. If 70% of these investments go to zero, 20% return 1-3x, and 10% deliver outsized returns, the 10% really need to return 50x-100x (or more) for a fund to return over 5x net of fees. In other words, venture investing is about “home runs per at bat, not hits per at bat.” While important, over-indexing to this phenomenon when placing investments creates a “unicorn hunting” mentality that helps to feed the absurdity in VC market bubbles (like the one we just lived through).

With the power law in mind, some VC investors may have concerns that Payscore’s focus on income verification alone (vs. the larger reporting ecosystem) is too “niche” to be a portfolio “winner” - it was definitely a concern that we had. Even with ~48M addressable rental units in the US, we initially had trouble arriving at a venture-scale total addressable market (TAM). That said, the following sold us on partnering with the Payscore team for the long haul:

  1. Serviceable Addressable Market (SAM): Most of the time only a fraction of the TAM is truly serviceable for a given company’s business model. If the SAM is over 20% of the TAM, that is considered pretty solid. The SAM for Payscore’s business model is a very significant portion of their TAM (much higher than 20%). Thus, we were able to realistically envision a significant SAM capture for Payscore, which alleviated our initial concerns about market size.

  2. TAM/SAM expansion & optionality: We primarily invested in Payscore because the company clearly has the beginnings of product-market-fit within the tenant screening and PMC customer segments. In our due diligence we also uncovered numerous TAM expanding use cases. We believe Payscore’s products could be applicable to numerous other industries/verticals such as Auto Leasing/Dealers, Single-family Mortgage Lenders & GSEs, Insurance, and even asset verification for healthcare (in particular Medicaid). This optionality is not far fetched. As a result, we grew even more comfortable that Payscore’s TAM is likely to increase in the future.

  3. Capital efficiency: When it comes to deploying capital and converting it into revenue, Payscore is easily in the top decile of early stage companies we have had the privilege of meeting with. This is evidenced through their impressive bootstrapping of this business (only $20K invested prior to April 2022) and strong cash management. As we learned more about the mentality of the team, their current pipeline, and their proposed use of funds, it was clear that capital efficiency would remain a focus as the company grew.

Payscore’s team is focused on “helping to make customers’ lives better”

Mark Fiebig, Co-Founder & CEO, brings 20+ years of experience in the software startup domain and 15+ years of residential real estate operating experience. Moreover, he has founded and served on the C-suite of multiple venture backed organizations. This experience shows - Mark runs a very focused ship with a clear vision and values.

We have yet to interact with Mark without him reminding us that Payscore’s faster process (users experience a 30-50% decrease in time spent processing rental applications) and higher completion rate exist to “help make peoples’ lives better.” With over 24 property management integrations and a clear mission for customer service, this ethos is clearly in the DNA of the company.

Stephen Arifin, Co-Founder & CTO, is a first-time founder with an impressive technical background. After graduating from UT Austin in 2016 with a degree in software engineering Stephen spent nearly 5 years at Microsoft as an Engineer in the AI Research team. Stephen helped found Payscore and joined the team full time in April 2021. After developing Payscore’s proprietary initial tech stack, Stephen has been able to surround himself with a couple of other strong AI/ML engineers from top-tier public tech companies.

Mark’s brother, Craig Fiebig, CMO, brings a plethora of experience in the software space including IBM and Microsoft where he eventually served as both the GM of Microsoft Office and for Windows Product Management for emerging markets. In other words, Craig led the international deployment efforts for one of the most successful software products ever. Since leaving Microsoft, Craig has shifted his focus to entrepreneurship/VC and has founded and served on the board of numerous startups in the software industry. He joined Payscore recently and has been an absolute pleasure to partner with.

Our belief in the capabilities of Payscore’s team at the time of investment has only been further reinforced over the past two quarters. They are not only gritty and smart but also understand how to run and scale a business. Their impressive operating abilities allowed them to grow their revenue ~2.5x from 2021 to 2022, and they are on pace to more than 3x their revenue in 2023.

2023 and the future of income verification

Successful property managers confront challenges of risk and fairness with every transaction. Payscore’s ability to break down recurring, non-recurring, and asset-based financial data into one simple report is inherently less biased than many of the other verification solutions out there today. Payscore will continue to build on their industry leading speed, accuracy, and transparency by staying ahead of the ever shifting compliance landscape concerning fairness and bias.

Recent product updates include:

  • The use of AI and ML to make customer reports more visually appealing and improve new client onboarding.

  • Further enhancements to the accuracy of their industry leading algorithms for reading and classifying income information.

  • Enhanced integration with one of the leading property management software solutions.

  • Enhanced the current product offering by adding additional customized controls that can be set to each client's specific preferences/guidelines.

  • Launched an integration with Microsoft OneDrive.

Near term priorities and product roadmap:

  • Integrating LLM APIs to further enhance their industry leading accuracy.

  • Further mapping their product onto the regulatory and compliance landscape by introducing a true “Payscore” number to their reports.

  • The continued launch of new market segments including affordable housing.

Partner with Payscore to reduce income fraud and rent delinquencies

We're excited to witness the transformative impact that Payscore is making on the applicant screening process. Payscore is actively looking to partner with multifamily and single family operators, PMCs, and tenant screening companies to “make their lives better” via improved automation and accuracy.

For more information on partnering with Payscore, please reach out to Mark Fiebig at

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