Lending Platform Blend Labs Rises in Debut After Top-End IPO

(Bloomberg) -- Blend Labs Inc., a lending platform for financial companies, climbed 16% in its trading debut after raising $360 million in an initial public offering priced at the top of a marketed range.

Shares of San Francisco-based Blend, which sold for $18 each in the IPO, opened trading in New York Friday at $20 and closed at $20.90, giving the company a market value of about $4.6 billion. Accounting for employee stock options, the company’s diluted value of more than $5.8 billion.

Blend co-founder and Chief Executive Officer Nima Ghamsari will retain control of the company through ownership of 100% of the company’s Class B shares, which carry 40 votes each compared with one for Class A shares, according to the company’s filings with the U.S. Securities and Exchange Commission. Backers Lightspeed Venture Partners, Formation8, a affiliate of Temasek Holdings Pte, Coatue Management, Tiger Global Management, General Atlantic and Greylock Partners will have less than 15% of the voting power combined.

The nine-year-old lending startup has built platforms that 31 of the top 100 U.S. financial firms use for products such as mortgages, vehicle loans and credit cards at the end of 2020. In total, the firm helps companies process an average of more than $5 billion in transactions per day. Blend said in January that it had raised $300 million from investors, giving the company a valuation of $3.3 billion.

Greylock partner Jerry Chen, who is a Blend board member, sees the company as fixing a key shortfall of the mortgage industry.

“Lending was broken. It was more paperwork than you can ever imagine,” Chen said. “Applying for a mortgage should just be an app on your phone.”

The coronavirus pandemic has accelerated the move toward digitization in the financial services sector, a sign that bodes well for Blend, the company said in the filing. Blend reported a 166% increase in transactions on its platform from March 2020 through the end of the year compared to 2019, a portion of which is attributable to financial companies’ desire to digitize some processes.

Blend had a net loss of $75 million on revenue of $96 million in 2020, compared with a loss of $81 million on revenue of $51 million the previous year, according to its filings.

The offering was led by Goldman Sachs Group Inc., Allen & Co. and Wells Fargo & Co. Blend’s shares are trading on the New York Stock Exchange under the symbol BLND.

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