Digital mortgage lender Better.com has raised $500 million from Japanese investment conglomerate SoftBank that values the company at $6 billion.
The financing is notable for a few reasons. For one, it values Better.com at $6 billion, which is up 50% from what the $4 billion it was valued at last November when it raised $200 million in a Series D financing. It’s always 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. As such, it’s not a big surprise that Better.com has raised $700 million in 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 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 had 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.”
At that time, he had also 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 two-and-a-half billion a month of loans 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. “We’re two-and-a half times that now.”