Digital mortgage lender Better.com has raised a $500 million round from Japanese investment conglomerate SoftBank that values the company at $6 billion.
The financing is notable for a few reasons. For one, that new $6 billion valuation is up 50% from the $4 billion it was valued at last November when it raised $200 million in Series D financing. It’s also up tenfold from its $600 million valuation at the time of its Series C raise in August 2019.
Secondly, it’s further proof that mortgage -- a traditionally “unsexy” industry that has long been in need of disruption -- is officially hot. For all its controversy, when SoftBank invests, people pay attention.
The COVID-19 pandemic and historically low mortgage rates fueled acceleration in the online lending space in a way that no one could have anticipated. That, combined with the general fervor in venture funding, means it’s not a big surprise that Better.com has raised $700 million in just a matter of months.
The investment brings Better.com’s total funding raised to over $900 million since its 2014 inception. Other backers include Goldman Sachs, Kleiner Perkins, American Express, Activant Capital and Citi, among others.
According to The Wall Street Journal, SoftBank is buying shares from Better’s existing investors, and agreed to give all of its voting rights to CEO and founder Vishal Garg “in a sign of its eagerness” to invest in the company.
During a one-on-one interview at LendIt Fintech’s USA 2020 virtual event in October, Garg told me that an IPO was definitely in the works.
“We’ll do it when it’s right,” he said. “One of the core tenets of American capitalism is the ability for your customers to buy your stock.”
And in February, Bloomberg reported that the startup had tapped Morgan Stanley and Bank of America Corp. for a planned initial public offering in the U.S. But there's been no further word since. It's not unusual for companies to raise large sums before an IPO. Affirm did it last year, for example.
Also last October, Varg told me that before the pandemic, Better was processing about $1.2 billion a month in loans. But as of October 2020, it was funding over $2.5 billion per month, and had gone from 1,500 staffers to about 4,000 worldwide.
“When the pandemic started we were doing less than sort of like $50 million a month of revenue,” he said at the time. “We’re two-and-a half times that now.”
Since then, those numbers have gone up even more. A company spokesperson told me today that Better.com funded $14 billion in loan volume in the first quarter of 2021 alone and that it is currently funding over $4 billions in loans a month. For some context, Better.com funded $25 billion in loan volume in all of 2020. And, it currently has 6,000 employees -- up 2,000 from last October.
This article was updated post-publication with some additional numbers provided by the company.