Better: Redefining Homeownership Journey

Company Profile is an initiative by StartupTalky to publish verified information on different startups and organizations. The content in this post has been approved by Better.

Homeownership forms a considerable part of the economy. Housing is approximately a $33 trillion business, with mortgages accounting for $15 trillion. Despite these vast figures, home finance operates in the same traditional way it has for decades – via opaque systems and higher commission charging intermediaries whose interests are misaligned with the consumers.

It's when Better comes into the picture. This US-based company is redefining the homeownership process from the ground up through technology and human effort. From founders to the plan, learn more about Better further in the article.

Better – Company Highlights

Better – About
Better – Industry
Better – Founders and Team
Better – Startup Story
Better – Mission and Vision
Better – Business Model
Better – Revenue Model
Better – Products and Services
Better – Challenges Faced
Better – Funding and Investors
Better – Mergers and Acquisitions
Better – Growth
Better – Partners
Better – Awards and Achievements
Better – Competitors
Better – Future Plan

Better – About

Better.com, Better, or Better Holdco, Inc. operates as an online mortgage lender. It is a digital-first platform for mortgage origination, homeowners insurance, and related services. The company is the direct lender of jumbo loans, conventional loans, refinancing loans, and adjustable-rate mortgages.

Headquartered in New York, U.S., Better has 3 subsidiaries Better Mortgage, Better Settlement Services, and Better Cover. Till mid-2021, the company funded $45 billion+ in home loans and provided $25 billion+ in cumulative coverage via Better Cover and Better Settlement Services.

Better – Industry

Housing finance is a lending service that offers money to customers to purchase new properties, including land and home. Better is a digital homeownership platform operating in the housing finance industry. The industry's global market size was estimated to be $4,520.67 billion in 2021 and is forecasted to grow to $33,298.79 billion by 2031 at a CAGR of 22.3%.

The increasing need to streamline the housing lending service and for money among individuals and businesses to purchase housing is the leading industry growth factor. However, the Covid-19 pandemic, stringent rules by banks and financial institutions to provide finance, and rising prices of housing properties in developing countries worldwide are expected to hamper the market growth.

Some companies dominating the housing finance market are JPMorgan Chase & Co., Goldman Sachs, Royal Bank of Canada, Citigroup, and Lloyd's Banking Group.

Better – Founders and Team

Vishal Garg and Shawn Low are the co-Founders of Better.

Vishal Garg

An Indian-American entrepreneur, Vishal Garg attended NYU Stern School of Business for BS in Finance (International Business). In addition to Better, he previously co-founded MRU Holdings. Moreover, Vishal is the ex-Founding Partner of One Zero Capital, Phoenix Holdings. Now he holds the position of Better's CEO.

Shawn Low

Shawn Low graduated from Harvard University. He worked as a Consultant at The Boston Consulting Group and the Co-founder and Senior Advisor at Better till July 2021. Shawn is the ex-Advisor of Huspy and the ex-Visiting Partner of Iterative. Currently, he is the co-founder of LXA.

At present, Better has around 5,500+ employees.

Better – Startup Story

Better was incorporated as "Better Holdco Inc." by Vishal Garg and Shawn Low in 2014 to re-engineer the mortgage process. Vishal and his wife had a negative experience obtaining a mortgage when looking forward to buying their first home, which led to the company's formation.

Better developed an investor rules engine for matching borrowers and mortgage products to 10+ large institutional investors via algorithms in 2015. Later in the same year, the company started working with borrowers directly online and funded its first 100% digital loan.

In 2016, the company launched its first subsidiary named Better Mortgage. After one year, in 2017, it introduced the one-day verified pre-approval letter. Better surpassed $1 billion in total funded loans and launched a second subsidiary named Better Real Estate in 2018. Later in 2019, it launched its third and fourth subsidiaries, Better Cover and Better Settlement Services.

The company announced its plan to go public via a SPAC merger with Aurora Acquisition Corp by the end of 2021. However, in August 2022, its deadline to go public was delayed until March 2023. A year later, Better announced the shutdown of its Better Real Estate subsidiary in June 2023.

Better – Mission and Vision

Better's mission is to make homeownership simpler, faster, and, most importantly, more accessible for all Americans.

Better – Business Model

Better obtain leads from personal finance companies such as NerdWallet and Credit Karma to attract customers and market to them. The platform offers users fast quotes and a quick loan application approval process without the intervention of mortgage intermediaries. It further allows the company to pass on savings to the customers in the form of more competitive rates. Moreover, Better doesn't charge loan origination fees while providing loans.

Better – Revenue Model

Better generates revenue by selling mortgages to approximately 30 secondary mortgage investors, including Wells Fargo, Bank of America, and Fannie Mae, before making interest. Moreover, it also runs an affiliate company that looks after title services, letting Better earn money by receiving a percentage of fees.

Better – Products and Services

Better offers multiple services, including Buy a Home, Sell a Home, Home Affordability Calculator, Get Cash Offer, Contact an Agent, Home Improvement Loan, and Get Home Inspection.

Better – Challenges Faced

In December 2021, Vishal laid off around 900 employees over a Zoom call due to employees' lack of productivity and efficiency. Vishal received severe backlash from the public and took a break from the company but returned in January 2022. The company further terminated 3,000 employees in March 2022.

Three months later, in June 2022, the company's former senior executive filed a lawsuit alleging that Better misled investors in its financial filings and other representations to go public. After a few months, three senior executives left the company. In August 2022, Better terminated around 250 employees in the fourth round of layoffs. And in June 2023, the company laid off its entire real estate team and shut down the unit.

Why Did Better.com Fired 3000 Employees and Where Did They Go Wrong?

In a second mass layoff by Better.com founded by Vishal Garg, the company has laid off 3000 employees. Find out the reason behind it.

StartupTalkyDamini Bhandary

Better – Funding and Investors

Over 6 funding rounds, Better raised a total of $905 million. Its latest funding round – 'Secondary Market,' was raised on April 8, 2021, and secured $500 million. Some leading investors that back the company are SoftBank, Citi, Ally, Pingan Bank, Goldman Sachs, KPCB (Kleiner Perkins Caufield Byers, and American Express.

Better – Mergers and Acquisitions

Better acquired 2 companies, London House Exchange on September 3, 2021, and Trussle on July 12, 2021.

Better – Growth

Better was reported to generate $250 million in net profits in 2020. Its estimated annual revenue during 2020 was around $875.6 million – up nearly 10x the prior year – leading to $172.1 million in income. And in 2021, the company's revenue grew to $1.23 billion or 41%. Furthermore, in 2020, the company's valuation was $4 billion, which grew to $6 billion in April 2021.

Better – Partners

Better has partnered with the following:

• Avex Funding
• Palantir
• Ally Financial

Better – Awards and Achievements

Some popular awards that Better garnered over the years are as follows:

• Listed as the Best Mortgage Lenders with No Origination Fee 2021 by Forbes.
• Recognized as one of the Best Online Mortgage Lenders 2021 by Forbes.
• Ranked #1 on LinkedIn's Top Startups List for 2021.
• Named in the Best Company Workplace Culture Awards list 2020 by Comparably.
• Listed in The Forbes Fintech 50: The Most Innovative Fintech Companies in 2020.

Better – Competitors

Better's competitors include the following:

• Guaranteed Rate
• LoanDepot
• Rocket Mortgage

Better – Future Plan

Better's deadline for going public via a SPAC merger with Aurora Acquisition Corporation has been extended until September 30, 2023.

FAQs

What does Better do?

Better.com, Better, or Better Holdco Inc. operates as an online mortgage lender. It is a digital-first platform for mortgage origination, homeowners insurance, and related services. The company is the direct lender of jumbo loans, conventional loans, refinancing loans, and adjustable-rate mortgages.

Who are the founders of Better?

Vishal Garg and Shawn Low are the Co-founders of Better.

Who are the main competitors of Better?

Guaranteed Rate, LoanDepot, and Rocket Mortgage are amongst the top competitors of Better.