Better.com, the online mortgage lender, is set to make its public debut on the Nasdaq Capital Market with ticker symbols “BETR” and “BETRW”. After merging with SPAC Aurora Acquisition Corp., the newly formed entity is now known as Better Home & Finance Holding Company.
This merger brings in approximately $565 million in fresh capital for Better.com, including a $528 million convertible note from SoftBank affiliates and additional equity from funds associated with NaMa Capital (formerly Novator Capital), an investment firm linked to Aurora.
The move to go public comes after a series of challenges for Better.com. The startup reported a net loss of $89.9 million in Q1 and underwent substantial downsizing, cutting around 91% of its workforce over an 18-month period. Despite narrowing losses compared to Q1 2022, Better.com faced difficulties due to high mortgage interest rates and a slowdown in the housing market.
Moreover, the company’s reputation suffered due to botched layoffs, employee treatment issues, financial missteps, executive departures, and other allegations.
Arnaud Massenet, former CEO of Aurora and now a director of Better Home & Finance, highlighted Aurora’s role in taking Better.com public. The merger resulted in over $1.3 billion added to Better.com’s balance sheet through Aurora’s efforts.
Better.com stands out with its proprietary Tinman platform, which employs a unique “supervised learning model” to optimize mortgage processes. This allows the company to offer home loans that are on average 45 basis points cheaper than competitors, potentially saving customers tens of thousands of dollars over a 30-year mortgage.
CEO and co-founder Vishal Garg and former general counsel and chief administrative officer Nick Calamari shared insights on Better.com’s public market entry and future plans. Garg acknowledged the decision to go public and access SoftBank’s capital, despite acknowledging some jitters. The company’s cash flow still faces challenges due to unexpected interest rate hikes, a faster shrinking mortgage market, and limited housing supply.
However, Better.com has adapted by focusing on purchase mortgages, reducing recurring costs by $1 billion, and decreasing quarterly losses by 73% year-over-year.
Better.com’s shift is evident in its business composition, transitioning from 90% refinances and 10% purchases to the opposite. Revenue sources include mortgage revenue, title insurance, homeowners insurance, realtor match, and international revenue through its UK platform.
The influx of capital from SoftBank will support Better.com’s goal of enhancing technology and customer experience. Garg highlighted the aim to make the mortgage process faster and more seamless, ultimately working towards enabling financing or refinancing a home in just one day.
Despite challenges, Better.com currently has just under 1,000 employees. Garg emphasized rebuilding trust through leadership training and focusing on both customers and employees. He also discussed the SEC’s recent determination in favor of the company, expressing relief and gratitude for a second chance.
As Better.com navigates its public debut, the company aims to further innovate its mission of making homeownership more affordable and accessible, driven by a dedicated team of around 1,000 individuals.
