Better.com Secures $500 Million Investment from SoftBank

Better.com, a digital mortgage lender, has successfully completed a $500 million funding round led by Japanese conglomerate SoftBank. This investment results in a company valuation of $6 billion.

Significant Valuation Increase

This new valuation represents a substantial increase of 50% compared to the $4 billion valuation achieved in November of the previous year during its Series D funding. It also marks a tenfold growth from the $600 million valuation recorded in August 2019 during its Series C raise.

Mortgage Industry Disruption

The financing highlights the growing interest in the mortgage industry, traditionally considered a sector ripe for innovation. SoftBank's investment carries significant weight and draws attention to the evolving landscape of mortgage lending.

Pandemic-Driven Acceleration

The COVID-19 pandemic and historically low mortgage interest rates have dramatically accelerated the growth of online lending platforms. This, coupled with the current surge in venture capital funding, explains Better.com's ability to secure $700 million in funding within a short timeframe.

Total Funding to Date

With this latest investment, Better.com's total funding since its founding in 2014 now exceeds $900 million. Key investors include Goldman Sachs, Kleiner Perkins, American Express, Activant Capital, and Citi.

SoftBank's Voting Rights

According to reports from The Wall Street Journal, SoftBank is acquiring shares from existing investors. Furthermore, the firm has ceded all voting rights to CEO and founder Vishal Garg, demonstrating a strong commitment to the company’s vision.

Potential IPO

During an interview at LendIt Fintech’s USA 2020 virtual event, Vishal Garg indicated that an initial public offering (IPO) was under consideration. He stated that allowing customers to invest in the company’s stock aligns with core principles of the American economic system.

Bloomberg reported in February that Better.com had engaged Morgan Stanley and Bank of America Corp. to prepare for a potential IPO in the U.S. However, no further updates have been released regarding this plan.

Growth in Loan Volume

Prior to the pandemic, Better.com was processing approximately $1.2 billion in loans monthly. By October 2020, this figure had risen to over $2.5 billion per month, accompanied by an expansion of its workforce from 1,500 to around 4,000 employees globally.

Garg noted that the company’s monthly revenue had more than doubled, increasing from less than $50 million before the pandemic to $125 million by October 2020.

Recent Performance

Since then, performance has continued to improve. A company representative confirmed that Better.com funded $14 billion in loan volume during the first quarter of 2021. Currently, the company is funding over $4 billion in loans each month.

For comparison, Better.com facilitated $25 billion in loan volume throughout all of 2020. The company now employs 6,000 individuals, an increase of 2,000 since last October.

This article has been updated to include additional data provided by the company.