Better.com, an online mortgage website that promises faster and cheaper home buying, raised $160 million in its latest funding round, the company announced in August.
Founder and CEO Vishal Garg, 41, launched Better.com in January 2016 after he and his wife, then pregnant with their second child, lost out on their dream home because of what Garg says are inefficiencies in the home-buying system.
“The process to buy a home is so slow, siloed and intentionally complicated,” says Garg, who had previously launched four investment-driven startups prior to founding Better.com. “I realized that if this process is this bad for me as a relatively sophisticated consumer who works in consumer financials, then it must be impossible for others,” he told Forbes.
With no down payment in his family’s future, Garg created exactly what he would’ve wanted during his own home search, bringing on Spotify’s former engineering manager, Erik Bernhardsson, who is now Better.com’s chief technology officer, to build out the website.
“We set out to completely reimagine the home buying system by lowering costs, speeding up the process and automating as much as we can,” says Garg, who immigrated to America from India with his family when he was seven. “By making home ownership much more attainable, I feel like we’re helping our clients achieve their American Dream.”
Better.com allows users to get a rate quote in as little as three seconds rather than the three days it traditionally takes through its streamlined, automated system, and get pre-approved for a mortgage in minutes rather than weeks. The company is currently funding $375 million in mortgages a month putting it on track to lend over $4 billion by the end of 2019.
An alum ofForbes 2018 Fintech 50, Better.com earned $24 million in revenue in 2018, with a $600 million valuation following this funding round, according to the company.
Aiming to be seen as the “Amazon of home ownership,” Better.com’s digital disruption of the mortgage industry works via a commission-free business model in which borrowers get rate quotes, apply for loans and sign required documents all online, allowing house hunters to compete with all-cash buyers.
Better.com matches homebuyers with the institution buying the loan, which then pays Better.com for the service. “The way the system is set up now is to benefit the insiders rather than the consumer. That’s what we’re working to change,” Garg says.
This latest funding round will go towards building out the company’s current offerings, which include title insurance, home insurance and expanding its REALTOR® network. The money will also be used for a life insurance offering expected to launch by Q1 2020.
To achieve this, the company plans on vastly expanding its team from 700 employees to an expected 2000 by year end.
Better.com’s growing product portfolio caught the eye of Activant Capital which also invested in Boxed, Indigo and Forter.
“Vishal is a visionary entrepreneur who was willing to put in the work to completely rebuild a broken system,” Steve Sarracino, Activant Capital’s founder and a Better.com board member told Forbes. “Not only is the company making money, but it’s really helping its customers and will only continue to do so on a larger scale.”
Currently licensed to operate in 39 states, Better.com has applications out in the remaining 11, with plans to operate across the entire U.S.
“We’re riding the tsunami right now in terms of growth,” Garg says, “but there is still so much to do. There are 52 million U.S. mortgages out there, and right now only 30,000 are with Better. We won’t stop until we’re helping everyone.”
Activant Capital, a global private investment firm, led the series C round, bringing the New York City-based company’s total funding to $254 million. Additional investment came from Ping An Global Voyager Fund, Ally Financial, Citi, AGNC, Healthcare of Ontario Pension Plan (HOOPP) and American Express Ventures, which joined existing shareholders Goldman Sachs, Pine Brook and Kleiner Perkins in the round.