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The funding brings the New York company’s total raised to $254 million, it said in a press release. The round appears to have been raised in tranches, according to the company’s Crunchbase profile.
Activant Capital, China-based Ping An Global Voyager Fund, Ally Financial, Citi, AGNC, Healthcare of Ontario Pension Plan (HOOPP) and American Express (Amex) Ventures joined existing shareholders Goldman Sachs, Pine Brook, and Kleiner Perkins in the round.
Better.com says it has “grown” at least three times in the last year, and by a multiple of ten over the last three years. The company currently funds $375 million in mortgages a month.
In the second quarter alone, Better.com says it funded $1 billion worth of loans, which was more than it executed in all of 2016 and 2017 combined. The new result puts the company on track to lend over $4 billion in 2019 to over 20,000 customers, it said.
Since its product launched in 2016, Better.com says it has thus far funded more than $4 billion in loans.
In a phone interview this morning, founder Vishal Garg told me that the company’s current revenue run rate is $120 million, which is four times more than the $30 million it was this time last year.
Garg came up with the idea for Better.com after losing out on a bid to buy a house to an all-cash buyer. He blamed the loss on “a slow and antiquated traditional mortgage process.”
“The mortgage process was a disaster. It took 60 days to close with lots of branch visits and faxing stuff at Kinko’s,” he told Crunchbase News. “The entire industry existed like the internet was never invented.”
So Garg used the money that would have been the down payment to start Better.com, a company that claims to have “digitized the entire mortgage process to eliminate commissions, fees, unnecessary steps, and time-wasting branch appointments.”
From the company’s website, homebuyers (or those refinancing) can upload and digitally sign documents to receive “loan estimates in seconds and a pre-approval within minutes.” The company claims it is able to “close” a typical mortgage 50 percent faster than the industry average (21 days vs. an industry average of 42 days).
It operates a commission-free business model that it says saves borrowers money upfront and hundreds a year in interest payments.
Better.com initially closed the series C in January at about $70 million but kept the round open due to investor demand, according to Garg.
Looking ahead, he said the company will use its new capital to accelerate product development, expand its strategic partnerships, and expand its headcount. In the last year, Better.com says it hired 550 people and now has over 700 employees, according to Varg. The company said it plans to hire another 400 people in sales and technology by year’s end, and have “between 2,000 and 3,000 employees by the end of next year.” It also opened additional offices in Irvine and Oakland, Calif., in 2018 and in Charlotte, N.C., this month, and recently moved its headquarters to 7 World Trade Center.
Indeed, there has long been a belief in tech that the $15 trillion mortgage industry is ripe for disruption. And investors are bullish on the space, and company.
For example, in June mortgage tech startup Blend raised $130 million that, according to Fortune, put the company “within striking distance of ‘unicorn’ status.” Temasek and General Atlantic led the firm’s Series E, which also included participation from extant backers 8VC, Founders Fund, Greylock Partners, and Lightspeed Venture Partners.
And, Roostify, which powers the digital mortgage process for lenders like Guild Mortgage and will soon serve as the backbone of JPMorgan Chase’s digital mortgage process, raised $25 million in January 2018.
Lindsay Fitzgerald, managing director at Amex Ventures, said Better.com is “making the entire homebuying experience faster and more affordable.”
Activant Capital founder and Better.com board member Steve Sarracino said the startup “is effectively overhauling the way millions of Americans make the most meaningful investment of their lives.”