Better.com scores $500M from Softbank, IPO whispers grow louder

Better.com received a $500 million investment on Thursday from the SoftBank Group, ballooning its valuation to $6 billion from $4 billion.

The latest capital infusion, first reported by the Wall Street Journal, comes less than five months after Better completed its $200 million Series D fundraise, led by venture capital firm L Catterton. Including today’s deal, Better has raised nearly $1 billion since its inception in 2014. The Softbank investment raises the volume on whispered speculation of an upcoming initial public offering by the originator and servicer.

As part of the deal, SoftBank will buy its share of the company from current stakeholders but its voting rights will defer to Better’s CEO Vishal Garg, WSJ found. The Japanese conglomerate hasn’t released any statements about its investment.

Better declined to comment on what the investment means for the company and what the plan is for the new capital. First launched for consumers in 2016, the company made a splash in the mortgage industry by focusing on the technologically savvy younger generations and modeling its business after Uber.

Better originated $20 billion in mortgage volume in 2020 from 88,100 borrowers, a surge from $4 billion in volume and 17,800 borrowers in 2019.

Better made National Mortgage News’ Best Companies to Work For lists in both 2019 and 2020. The company differentiated itself from others in the marketplace by eliminating commissions for its loan officers, instead opting for higher initial salaries in an effort to boost customer service.

"We've been able to grow nearly 500% year-on-year and on average 10% to 15% month-on-month," Garg said in an interview at the 2020 Digital Mortgage Conference. "We're probably the second-largest online lender today that's pure direct-to-consumer online. We're doing over $2.5 billion a month of volume."