Blend, A Digital Lending Platform, Valued At Over $4B In Its Public Debut
Blend, a digital lending platform, valued at over $4B in its public debut
Mortgages may not be glamorous, but they are a sizable industry.
If you've recently refinanced or purchased a home digitally, you're unlikely to have noticed the company behind the software — but there's a good chance it's Blend.
Since its inception in 2012, the startup has steadily grown to become a market leader in the mortgage technology space. Blend's white label technology powers mortgage applications on the websites of banks such as Wells Fargo and US Bank, among others, with the goal of streamlining and streamlining the mortgage process.
The SaaS platform of the San Francisco-based startup now processes more than $5 billion in mortgages and consumer loans per day, up from nearly $3 billion in July.
Blend debuted as a public company on the New York Stock Exchange today, trading under the ticker symbol "BLND." As of early afternoon Eastern Time, the stock had increased by more than 13% to $20.36.
On Thursday night, the company announced plans to offer 20 million shares at a price of $18, implying a target valuation of $3.6 billion.
This compares to a $3.3 billion valuation at the time of its most recent funding round in January — a $300 million Series G round led by Coatue and Tiger Global Management. Additionally, it's worth noting that Blend became a unicorn only last August, when it raised a $75 million Series F round. Blend had raised $665 million in total prior to Friday's public market debut.
Blend disclosed in its June 21 S-1 filing that its revenue would increase to $96 million in 2020 from $50.7 million in 2019. Meanwhile, its net loss shrunk to $74.6 million in 2020 from $81.5 million in 2019.
By 2020, the San Francisco-based startup's digital consumer lending platform will have significantly expanded. With this expansion, Blend began offering new configuration capabilities to its lender customers, enabling them to launch any consumer banking product "in days rather than months."
The company previously stated that it expects its revenue growth rate to “decline in future periods.” Additionally, it does not anticipate profitability anytime soon as it continues to prioritize growth. Blend also revealed that its top five customers will account for 34% of revenue in 2020.
Today, TechCrunch spoke with Nima Ghamsari, co-founder and CEO, about the company's decision to pursue a traditional IPO rather than the more common SPAC or even a direct listing.
For one thing, Blend stated that he wanted to demonstrate to customers that the company would be “around for a long time” by ensuring that there was sufficient capital on the balance sheet to continue growing.
“We had to convince some of the world's largest investors to invest in us, which speaks volumes about how long we'll be around to serve these customers,” he explained. “Consequently, it was a combination of our capital requirements and our desire to establish ourselves as a truly credible software provider in one of the most regulated industries.”
Ghamsari emphasized that Blend is a software company that automates the mortgage process, not a lender. As such, it collaborates with a slew of fintechs focused on mortgages.
“A lot of them use Blend as the infrastructure layer,” he explained.
Ghamsari believes that this is only the start for Blend.
In Conclusion
“One of the peculiarities of financial services is that they are still largely fueled by paper. Thus, a large portion of Blend's growth has been focused on delving deeper into the process that began years ago,” he explained. As mentioned previously, the company began with its mortgage product but has continued to expand it. Today, it is also used to power other types of loans, including auto, personal, and home equity.
“A significant portion of our growth is driven by our other lines of business,” Ghamsari told TechCrunch. “There is a lot to build because the larger digitization trends in financial services are just getting started. It's a sizable industry that is constantly changing.”
Better.com, a digital mortgage lender, announced in May that it would merge with a SPAC and go public in the second half of 2021.
