On the heels of its success with Compass and Opendoor, SoftBank is on the search for its next golden goose in the real estate industry. As the fintech industry gains speed in an increasingly digital world, the Japanese-based conglomerate has used its Vision Fund to invest millions in fintech startups, with Better.com being the latest to benefit from a multi-million-dollar cash infusion.
The digital mortgage startup will receive $500 million from the SoftBank Vision Fund, according to a report by The Wall Street Journal on Thursday. WSJ said the two companies have been discussing terms of the deal since late last year, as Better.com’s valuation skyrocketed to $4 billion after a $200 million Series D funding round.
SoftBank founder and Chief Executive Masayoshi Son has been bullish about his investments, with the CEO saying his recent string of success with Opendoor, Compass, SoFi, and Doordash proves his ability to pick the next Wall Street darling.
“Since the Vision Fund launched, the number of golden eggs are actually increasing in an accelerating mode,” Son said according to a previous Inman article. “Just about a year ago, many in the media were saying that we are only laying rotten eggs. Now, we are in the harvesting period.”
The WSJ article said Son is bringing the same bullishness to his deal with Better.com, as he allegedly agreed to relinquish all of SoftBank’s voting rights to Better.com founder and CEO Vishal Garg to sweeten the deal.
“In a sign of its eagerness to put money into Better, SoftBank agreed to give all of its voting rights to the company’s CEO and co-founder, Vishal Garg, some of the people said. Mr. Garg is not selling any of his shares in the offering—and the company won’t derive any proceeds either,” the article states.
Better.com declined to comment for the story; however, Inman was able to confirm the validity of WSJ’s article with sources close to the matter.
Better.com flourished during the pandemic, as low-interest rates sparked a boom in homebuyer demand. The five-year-old company, which also offers real estate referral, title and homeowners insurance, and settlement services, issued $25 billion in loans during 2020, which resulted in $800 million in revenue. The company issued a whopping $14 billion in loans during the first quarter of 2021 and is expected to go public soon alongside competitor Caliber Home Loans Inc.
The mortgage industry has been riding high on Wall Street, with United Wholesale Mortgage closing the largest-ever listing through a special-purpose-acquisition company (SPAC) in January, and Rocket Mortgage parent Rocket Companies raised staggering $1.8 billion in its July 2020 IPO.
However, everything hasn’t been peaches and cream — Homepoint and LoanDepot both chopped their offerings by more than 50 percent mere days before ringing the stock market bell. Both companies raised $94 million and $54 million, respectively, a far cry from their initial $250 million and $362.5 million goals.
AmeriHome Mortgage abandoned its $250 million IPO in October and was acquired by Western Alliance Bancorporation this week.
“The average investor is not convinced a mortgage company is a great bet as far as owning stock in it,” Inside Mortgage Finance CEO Guy Cecala told WSJ of the IPO market for mortgage businesses. “It’s a cyclical business, and they’re not sure what’s going to happen.”