Blend IPO: Digital Lending Platform Valued Over $4 Billion

The Rise of Blend: A Mortgage Tech Leader

While not typically considered a glamorous sector, the mortgage industry represents substantial economic activity. Many individuals who have recently secured or refinanced a home loan digitally may be unaware of the technology provider facilitating the process. However, there is a strong possibility that Blend was the company behind the scenes.

Company Overview and Growth

Established in 2012, Blend has experienced consistent expansion, becoming a prominent force within the mortgage technology landscape. The company’s white-label technology supports mortgage applications on the websites of major financial institutions, including Wells Fargo and U.S. Bank. This technology aims to streamline the mortgage process, enhancing its speed, simplicity, and transparency.

Currently, the San Francisco-based startup’s SaaS (software-as-a-service) platform processes over $5 billion in daily mortgage and consumer loan volume, an increase from approximately $3 billion in July of the previous year.

Public Debut and Valuation

Blend officially launched as a publicly traded entity on the New York Stock Exchange today, trading under the ticker symbol “BLND.” Early afternoon trading saw the stock price rise by over 13%, reaching $20.36.

Prior to the launch, the company announced plans to offer 20 million shares at $18 per share, suggesting a targeted valuation of $3.6 billion.

Funding History and Financial Performance

This valuation represents an increase from the $3.3 billion valuation achieved during its Series G funding round in January, which included investments from Coatue and Tiger Global Management. Blend attained unicorn status in August of last year with a $75 million Series F funding round. Before its public market debut on Friday, Blend had secured a total of $665 million in funding.

According to its S-1 filing on June 21, Blend’s revenue increased to $96 million in 2020, up from $50.7 million in 2019. Simultaneously, its net loss decreased from $81.5 million in 2019 to $74.6 million in 2020.

Platform Expansion and Future Outlook

In 2020, the company significantly broadened its digital consumer lending platform. This expansion enabled Blend to provide its lender clients with new configuration capabilities, allowing them to introduce any consumer banking product within days, rather than months.

The company anticipates a decline in its revenue growth rate in future periods and does not foresee achieving profitability in the near term, as it remains focused on expansion. Blend also disclosed that its top five customers accounted for 34% of its revenue in 2020.

IPO Strategy and Company Vision

TechCrunch recently interviewed co-founder and CEO Nima Ghamsari regarding the decision to pursue a traditional IPO rather than a SPAC or direct listing.

Ghamsari explained that Blend aimed to demonstrate its long-term commitment to its customers by ensuring sufficient capital reserves for continued growth. “We had to secure investment from some of the world’s leading investors, which underscores our longevity and dedication to serving these clients,” he stated. “This decision was driven by both our capital needs and our desire to establish ourselves as a trustworthy software provider within a highly regulated industry.”

Ghamsari clarified that Blend functions as a software company that facilitates the mortgage process, rather than directly originating mortgages. The company collaborates with a range of fintech companies working to provide mortgage solutions.

“Many of these companies utilize Blend as their underlying infrastructure,” he noted.

Looking Forward

Ghamsari expressed his belief that Blend is only at the beginning of its journey. He highlighted that a significant portion of the financial services industry still relies on paper-based processes.

“Much of Blend’s growth will come from deepening our involvement in the processes we initially addressed years ago,” he explained. The company began with a focus on mortgages but has since expanded to include other loan types, such as auto, personal, and home equity loans.

“A substantial portion of our growth is now driven by these additional lines of business,” Ghamsari told TechCrunch. “There is considerable potential for development as the broader trend toward digitization in financial services is just beginning. It’s a large industry undergoing significant change.”

In May, Better.com, a digital mortgage lender, announced its intention to merge with a SPAC, with plans to become publicly traded in the latter half of 2021.