Synergy One joins Figure’s Democratized Prime as flagship institutional client

According to a press release from Figure, Synergy One is now earning returns on its corporate Treasury notes by lending against HELOCs that were originated using Figure’s technology and are traded on its marketplace. This marks the first live institutional use of the Democratized Prime platform as both an investment and financing tool.

For Synergy One, the move serves a dual purpose. It secures competitive funding for its mortgage business while earning higher returns — about 9% — on idle Treasury cash. This compares to the typical returns of 3% to 4% that most Treasury notes earn — but without added complexity or risk.

“It’s rare to find a product that supports both sides of our balance sheet,” said Steve Majerus, CEO of Synergy One. “With Democratized Prime, we’re getting efficient funding and a strong return on capital, through assets we value and a process that’s incredibly straightforward.”

Figure CEO Michael Tannenbaum said in an interview with HousingWire that the Democratized Prime product aims to disrupt traditional warehouse lending by providing a more efficient, decentralized marketplace.

“We’re trying to go after this whole warehouse line business model with a more decentralized approach that just basically says that people will just look at the asset and not necessarily focus on the counterparty,” Tannenbaum explained.

“So rather than it be a transaction between Figure and [Synergy] … it’s a more marketplace approach to this overnight funding market — which makes sense, because when you’re buying an asset for 30 years, you want to think about that. But when you’re lending it for an hour, the threshold should be lower. And so we’re trying to take some of the barriers out at a very simple level.”

Tannenbaum said that Synergy One becoming the first institutional client to fund on the marketplace was a natural decision based on a preexisting relationship.

“Steve is a very forward-thinking person — he does a lot of M&A, he’s got innovative marketing, and he’s an innovator in his own right, from my perspective,” Tannenbaum said. “And so, as a result, I think it’s natural that one, he would be interested, but two, we would reach out to him.

“… He was our natural first call, given what he’s done previously. And also, from the Treasury standpoint, we know from having worked with Steve that he has a corporate Treasury to work with,” Tannenbaum said.

Marjerus said that before Democratized Prime, there was no vehicle for Synergy One to invest in asset-backed deals while also being able to fund other aspects of the operation or make other investments.

“So we think that’s why we can look at it opportunistically from both the balance sheet and our monthly income statement — both can be enhanced by our investment in Democratized Prime,” Marjerus said.

“We want to play a really small part in helping [Figure] as they reconstruct and reimagine the way capital markets operate,” he added. “You can have traditional marketplaces in the capital markets today; they’re highly functional, highly liquid and serve their purpose. But adoption of blockchain, decentralized options and bringing those to market in real life is, I think, what is differentiated Figure.”

Majerus said that Synergy One aims to diversify excess capital across both traditional and alternative products, and it saw Figure’s solution as a way to boost investment returns.

“This is exactly the kind of use case we envisioned when building Democratized Prime,” Tannenbaum said. “Corporate treasurers are looking for smarter capital allocation options, and with Democratized Prime, we’re delivering liquidity, yield and simplicity to institutions that have long been underserved.”

Wednesday’s announcement follows last week’s merger of Figure Technology Solutions and Figure Markets. Figure is rumored to go public in the fall, but the timeline has yet to be confirmed by company leadership.