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Baker (left) and James created a debt product whose interest rate is based on a home’s appreciation

Hayden James + Josh Baker, 28 + 26

Co-founder + CEO/Co-founder + CTO, Fraction Technologies

Life Story: After Hayden James and Josh Baker met through a mutual friend four years ago, they started working on an idea to build a Hootsuite-type social media automation business for independent professionals and entrepreneurs. Their startup was housed in the Vancouver office of U.S. conglomerate Century 21 Real Estate on nights and weekends. There, they quickly learned about the residential property industry from realtors who would come and go.

“Our question was, How do you bridge this gap between homeowners who have a lot of equity but don’t necessarily qualify for traditional credit products and can’t or don’t want to make monthly payments, and these investors that want access to the residential real estate market?” James asks.

The answer, it turns out, was a debt product whose interest rate is based on a home’s appreciation and gives owners access to $1.5 million in equity. “It acts like equity, but it’s structured like debt, so it’s cheaper than it would be otherwise,” explains James of Fraction’s Appreciation Mortgage. “It’s a very Vancouver story. I don’t know many other places this could have been born out of, based on the dynamic.”

In an industry like Vancouver real estate, any change to the status quo was going to ruffle some feathers. “I’m not going to name names, but yeah, we definitely had some people who were unhappy with us when we went to market, because we were taking away some of the profits,” Baker says. “But we’re developing a product that helps maximize fairness–you have to balance both sides.”

Bottom Line: James, Baker and third co-founder Rayan Rafay raised $289 million earlier this year, and 13-employee Fraction had $90 million worth of inquiries in the first 90 days after its product hit the market in February.