CapitalThinking Touts Web Pipeline as Simplifier

When asked whether the novel “The Unbearable Lightness of Being” inspired CapitalThinking’s logo — a cobalt-blue bowler hat — the company’s chief executive, Heather Shively, laughed and said, “That and ‘The Avengers,’ ‘The Thomas Crowne Affair,’ and ‘Cabaret.’ ”

By alluding to such wily and inventive movie characters, Ms. Shively captures the spirit of her young company — and that of the Internet as well.

After its start-up 18 months ago as a commercial mortgage and real estate marketplace where lenders and borrowers would come together for transactions, CapitalThinking shifted its business strategy and focused on technology to facilitate commercial lending.

The company — which was founded by Ms. Shively, 33, and Charles Ferguson, who sold the software company Vermeer Technologies to Microsoft Corp. in 1996 — now offers a Web-based loan pipeline for commercial mortgage lenders and brokers that executives say will make lending more efficient and less costly.

Observers say that is where the real commercial mortgage technology battle will be fought in the next few years.

As in online residential lending, commercial lending over the Web has proven difficult. Last year almost a dozen companies competed in this market, but after an abrupt shakeout, only two remain.

One problem is that commercial mortgage deals often involve large sums and complicated negotiations. Most of the parties involved still prefer to initiate transactions over the telephone.

Joseph Rubin, a partner in Ernst & Young, said that by trying to facilitate the connection between a borrower and lender, the online commercial originators tried to solve a problem that did not exist. The real hassles in commercial transactions involve back-office processes and transfer of data among the many players, he said.

“CapitalThinking recognized that the original concept of online originations — build a Web site and a borrower will come — was never going to work,” Mr. Rubin said. “Now the company is focusing on streamlining the processes of the business so that you can originate, underwrite, and close a loan more efficiently and for less cost.”

Ms. Shively — who after college spent three years as a Peace Corps volunteer in the west African nation of Mali, and was a director in Bank of Montreal’s North American capital markets group before co-founding CapitalThinking — said it originally had several business lines. But from Day 1 it emphasized technology, she said.

She called the changing marketplace and CapitalThinking’s strategy natural evolutions. Even when the company focused on online originations, it maintained a brokerage staff she said.

CapitalThinking was never looking to automate the process, Ms. Shively said. “This is a relationship-driven business, and you don’t take the touch out of the process of closing a deal,” she said. “These are highly structured, highly negotiated transactions.”

The company has the potential to reduce lenders’ costs as well as to create a streamlined communications process, Ms. Shively said.

Users of CapitalThinking’s pipeline enter loan information into Web-based software and can follow the loan’s progress throughout the process. Loan packages can be e-mailed or printed out and physically mailed, and all the players, including title and appraisal companies, can send their documents on the Web.

Ms. Shively said that despite the industry’s aversion to change she believes the product’s benefits will be too big to ignore.

“We anticipate that it’s going to be easy to process these, and you won’t think twice about it, just as you don’t think twice about picking up a phone and making a phone call,” she said. “It’s just that much easier to do it.”

The company’s honed business model is like fishing with a net instead of a line, Ms. Shively said. CapitalThinking is helping lenders and brokers make many loans as opposed to bringing them together with borrowers for single transactions, she said.

But it is not alone. Several other companies, including Emortgagedesk.com, Cunderwriter.com, Trepp, and Ecognita, have begun similar products.

Looplender is one of the few remaining commercial mortgage marketplaces. John Leeb, managing director of its parent company, LoopNet, said commercial lenders are looking for ways to cut expenses and streamline. “If that’s the case, then that type of a business could make sense,” he said.

Mr. Rubin said CapitalThinking is filling a real need. “The market didn’t need matching up borrowers and lenders. That’s why last year was kind of a disaster and this year will be more interesting.”