Online Lender Better.com Raises $200 Million at $4 Billion Valuation

(Bloomberg) -- Online mortgage lender Better.com has closed a new funding round led by private equity firm L Catterton, according to an internal memo reviewed by Bloomberg News.

The New York-based startup raised about $200 million in a series D financing to fund growth, according to the Better.com memo. The company is valued in the round at $4 billion, said people familiar with the matter who asked not to be identified because the information was private.

Other investors in the round included Activant Capital, Ally Financial, American Express Ventures, Ping An and 9Yards Capital, according to the memo. The company has now raised a total of $410 million, the memo show.

“We’re excited about new and existing investors continuing to support our mission to make homeownership simpler, faster and more accessible for all Americans,” Vishal Garg, the company’s chief executive officer and founder, said in response to a Bloomberg inquiry.

A representative for L Catterton didn’t immediately respond to a request for comment.

The low-yield environment this year has benefited mortgage lenders, leading to robust deal activity in the sector. United Wholesale Mortgage is going public through a so-called blank-check company in a deal that valued it at $16 billion including debt. Shares of online mortgage lender Rocket Cos. have climbed 19% since its $2.1 billion initial public offering in August.

With interest rates low and home prices climbing, the year has been one of the mortgage industry’s best in recent memory. Loan originations are expected to top $3 trillion, according to the Mortgage Bankers Association. Profit margins are at the highest level since at least 2000, Urban Institute figures show.

Founded in 2016, Better.com is among a clutch of lenders that have sought to streamline the mortgage process by moving almost all of it online. Garg, One Zero Capital’s founding partner, previously started MRU Holdings Inc., a student loan provider doing business as MyRichUncle that filed for bankruptcy in 2009.

Better.com counts Goldman Sachs Group Inc. and Citigroup Inc. among its backers and has been expanding at a rapid clip over the past year. It has hired more than 2,500 workers since the start of the coronavirus pandemic.

Kevin Ryan, a former Morgan Stanley investment banker, was appointed chief financial officer of Better.com as of last month, according to Ryan’s LinkedIn profile.

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