It’s official. Better.com went public this morning unlocking $565 million in fresh capital to further invest in its technology and increase the opportunities for homeownership.
In an exclusive interview with NMP, Vishal Garg, CEO and founder of Better and CEO and director of Better Home & Finance, said, “It dramatically increases our ability to grow as the interest rate cycle turns.”
He said the last time rates went down, “we grew 100x. From doing $500 million a year in volume to doing over $60 billion in volume.”
He said if the cycle turns, they will now have the additional capital to market and build a national brand.
Better.com initially made plans to go public via a $6 billion special purchase acquisition company (SPAC) in May 2021. The deal was later valued at $7.7 billion but faced delays amid numerous challenges for the company, including layoffs, high-profile executive departures, a housing market slowdown, and negative publicity. Industry observers had expressed doubt about the company's ability to materialize its public debut plans.
Garg said its growth over the past three years was capacity-constrained because it couldn’t hire enough salespeople, processors, and underwriters. “Now, when you can go from click to commitment letter, in a couple of hours using our platform, we think we will have substantially less capacity constraints than our industry peers as the market comes back.”
He said this might be the worst time in the mortgage industry and the worst housing inventory period to go public, but “being out in the market now allows us to be positioned, you know, having cleaned up and making our business so much more efficient over the last 18 months, to really be poised for growth as the market turns.”
Since Better first announced the business combination with Aurora Acquisition Corp., a SPAC, the company has doubled down on technology to make itself leaner and more efficient while continuing to improve the homeownership process for its customers.
In January 2023, Better announced One Day Mortgage, a product that allows customers to go online, get pre-approved, lock their rate, and get a binding mortgage commitment letter from Better Mortgage, all within 24 hours. In addition, Better has invested considerable resources into developing Tinman, its proprietary loan origination platform. The platform has served as a focal point for improving Better’s internal efficiency and streamlining the homeownership experience for the company’s customers. The additional capital from the business combination will allow Better to continue investing in Tinman, propel the platform as a key driver behind Better’s short and long-term growth, and position Better for long-term success across cycles.
“Going public is a momentous occasion and we are thankful to share it with our employees, shareholders, and regulators,” said Harit Talwar, chairman of the Better Home & Finance board of directors. “We view this as a milestone, not a destination, and an opportunity to renew our commitment to making the homeownership experience better for our customers. We are proud of reaching over $100 billion in funded volume and of the technology we have built, but Better’s best days still lie ahead.”
In the lead up to the IPO, the Securities and Exchange Commission had conducted an investigation to determine if violations of federal securities laws occurred but eventually stated it did not intend to recommend enforcement action against Better.com.
The struggling fintech startup laid off its real estate team on June 7, shifting to a partnership agent model, and continues to face financial challenges.
Other Aurora filings from July reveal that Better.com posted a net loss of $89.9 million in Q1 2023 and had cut about 91% of its workforce over roughly an 18-month period. Despite narrowing its loss compared to a net loss of $327.7 million in the first quarter of 2022, the company is still clearly struggling.
