Digital mortgage lending startup Better.com is reportedly in talks to raise more than $100 million in new funding at a valuation of about $4 billion, according to tech news outlet The Information.
Attributing the news to “two people familiar with the matter,” The Information said Better.com’s valuation was about $720 million last year and that the company has told investors it expects revenue to jump from about $100 million in 2019 to more than $800 million this year. The fintech startup announced in August 2019 that it had raised $160 million in a Series C funding round that valued the company at “north of $600 million” and put its total funding raised at $254 million at that time.
The new funding is reportedly in advance of a public offering in the “near future,” according to the news outlet.
The Information did not know the identities of the investors for this latest funding round, but previous investors include Citi, Goldman Sachs, Ally Financial and American Express Ventures.
“Investors have been plowing money lately into startups whose businesses have gotten an unexpected boost from the coronavirus pandemic. In Better.com’s case, the lift has come both from lower borrowing costs and from consumers’ desire to conduct transactions online rather than in person because of social distancing guidelines,” The Information said.
“Still, there is no guarantee that Better.com can turn the recent surge into a durable business. The mortgage business is cyclical, and investors previously had been leery of placing big bets on real estate technology in particular, given its often-thin profit margins and limited technological advantages over long-established businesses in the sector.”
The news outlet also pointed out that Fannie Mae and Freddie Mac will begin imposing a 0.5 percent fee on refinances starting December 1, which could put a damper on demand for refinances.
Vishal Garg | Photo credit: Vishal Garg on Twitter
At the end of March, in an internal memo obtained by Inman, Better.com CEO Vishal Garg said the company was making a push to hire laid-off hospitality industry workers, as the spread of COVID-19 wrecked the hospitality industry, closing bars, restaurants and hotels across the country.
Garg, in the memo, said the growing digital mortgage startup had a need to hire approximately 150 colleagues a month in sales and mortgage operations to meet growing demand. The company planned to hire a total of 1,000 new employees this year. At the time of its Series C round in August 2019, Better.com had more than 700 employees, according to Crunchbase. As of Thursday, the company had 3,163 employees, according to LinkedIn, which is mostly in line with the 2,000 to 3,000 employees the company expected to have at the end of 2020.
Garg founded Better.com in 2016, after he said he lost a home to an all-cash buyer. He blamed his loss on a “slow and antiquated traditional mortgage process.” Instead, he used the money he saved for the down payment to start Better.com. The goal, he said, was to digitize the entire process and eliminate commissions, fees, unnecessary steps, and time-wasting appointments.
Using the company’s digital platform, consumers can upload and eSign documents, get loan estimates in seconds and pre-approval within minutes. The company claims it can close a traditional mortgage in 21 days, versus an industry average of 42 days.
Better.com did not immediately return a request for comment. Inman will update this story if and when we hear back.
