Mortgages may not be considered sexy, but they are a big business.
If you’ve recently refinanced or bought a home digitally, you might not have noticed the company empowering the software behind it — butThere’s a good chance the company is bland.
Founded in 2012, the startup has steadily grown to be a leader in the mortgage tech industry. Blend’s white label technology powers on-site mortgage applications at banks including Wells Fargo and US Bank, for example, with the goal of making the process faster, simpler and more transparent.
The San Francisco-based startup’s SaaS (software-as-a-service) platform currently processes more than $5 billion in mortgages and consumer loans per day, up from nearly $3 billion last July.
Today, Blend makes its debut on the New York Stock Exchange as a publicly traded company, trading under the symbol .BLNDIn the early afternoon, Eastern Time, the stock was trading more than 13% at $20.36.
On Thursday night, the company said it would offer 20 million shares at a price of $18 per share, indicating that the company is targeting a valuation of $3.6 billion.
This compares to a $3.3 billion valuation at the time of its last raise in January — a $300 million Series G funding round that included participation from Coteau and Tiger Global Management. Plus, let’s not forget that Blend only became a unicorn last August when it raised a $75 million Series F. In its lifetime, Blend had raised $665 million prior to Friday’s public market debut.
in its filing S1 On June 21, Blend revealed that its revenue had climbed from $50.7 million in 2019 to $96 million in 2020. Meanwhile, its net loss narrowed from $81.5 million in 2019 to $74.6 million in 2020.
In 2020, the San Francisco-based startup significantly expanded its digital consumer lending platform. With that expansion, Blend began offering its lender customers new configuration capabilities so that they can launch any consumer banking product “in days instead of months”“
Looking ahead, the company had said that it expects its revenue growth rate to “decline in the future period”. It doesn’t envision achieving profitability any time soon as it continues to focus on growth. Blend also revealed that in 2020, its top five customers accounted for 34% of its revenue.
Today, ClearTips spoke with co-founder and CEO Nima Gamsari about the company’s decision to go with a traditional IPO versus the ubiquitous SPAC or even a direct listing.
For one, Blend said it wants to show its customers that it’s been “a company around for a long time,” by making sure it has enough on its balance sheet to grow.
“We had to talk to some of the biggest investors in the world and convince us to invest in it, and that tells us how long we’ll be there to serve these customers,” he said. “So it was a combination of our need for capital and wanting to reinvent ourselves as a really reliable software provider for one of the most regulated industries.”
Gamsari emphasized that Blend is a software company that powers the mortgage process and is not a company offering mortgages. As such, it works with a bunch of fintechs who are working to provide mortgages.
“A lot of them are using Blend under the hood, as an infrastructure layer,” he said.
Overall, Gamsari believes this is just the beginning for Blend.
“One of the things about financial services is that it is still mostly driven by paper. So a lot of the development of Blend is going deeper in this process that we started years ago,” he said. As mentioned above, the company started with its mortgage product but just kept on adding to it. Today, it also powers other loans like auto, personal and home equity.
“A lot of our growth is really driven by our other lines of business,” Gamsari told ClearTips. “There is a lot to build on as the big digitization trends in financial services are just beginning. It’s a relatively large industry with a lot of change.”
In May, digital mortgage lender Better.com announced that it would tie up with SPAC to go public in the second half of 2021.