After a series of delays, Better, the embattled mortgage company backed by SoftBank, is planning to go public next week after stockholders approved the SPAC merger earlier this month.
But after the last couple of years, you can’t help but wonder what will happen when Better actually lists. As I wrote yesterday evening after interviewing Better CEO Vishal Garg and CFO Kevin Ryan:
Better—once a prized unicorn valued at $7.7 billion just two years ago—has been struggling to regain its footing ever since Garg infamously laid off 9% of the company’s staff on Zoom, then accused those employees of “stealing” from the company on the professional site Blind. Around the time Garg returned from a temporary leave of absence at the beginning of last year, stories about old, damning lawsuits resurfaced. Three of Better’s board members have resigned since 2021, and three of Better’s executives were fired or left the company. Better’s former head of sales is in the middle of suing the company for allegedly misleading investors. Garg declined to comment on the lawsuit apart from saying: “We think her claims are baseless.” In the meantime, a pilot program with a potential commercial partner was canceled, and Barclays wound down the $500 million warehouse line it had provided to Better, according to filings.
Amid the layoffs and voluntary turnover, Better is a much smaller operation than it was just two years ago—91% smaller in terms of headcount, with 950 employees as of June, compared to the more than 10,400 it employed at its peak at the end of 2021, according to filings. Approximately 420 of Better’s current employees are based in India. (Kevin Ryan, Better’s CFO, who also spoke with Fortune, said that most of the attrition was due to layoffs, but wouldn’t go into specifics.)
Garg says that Better staffed up rapidly during the pandemic to meet customer demand, and that many of those roles were no longer necessary, as Better has automated much of the underwriting determination process via One Day Mortgage, which it rolled out publicly in January. (Garg and Ryan declined to share any metrics around One Day Mortgage. Ryan said they would provide details in their third-quarter earnings report.)
“Our people are five times more productive,” Garg says, adding later: “A lot of the attrition that took place, whether through layoffs or voluntary attrition, a lot of those tasks that were being performed by people are now being performed by the machine. And volume has come down and customer demand has come down across the board in the industry.”
Company financial documents show Better’s funded loan volume has sunk enormously: In the first three months of the year, volume was $800 million, compared to $7 billion in 2022.
What has continued to dumbfound me about this SPAC merger is the terms Garg agreed to with SoftBank in order to secure funding for the deal. As I’ve previously reported, Garg made a highly unusual concession: to personally compensate the Japanese investment firm for potential losses depending on how the shares ultimately perform over the next five years. In the worst case, he could theoretically have to chalk up the entire $550 million sum himself.
Here’s what he said about it:
Garg says he agreed to the unusual agreement with SoftBank in 2021 because he “knew that the capital was important for the company” and that Better is his “life’s work.”
I asked whether he has any regrets about it now.
It was the only question of mine that Garg answered in one word: “None,” he says.
You can read the full story here.
An important programming note…I wanted to say a quick word and thank Jackson Fordyce for his tireless efforts curating the Term Sheet deals section every single day since he joined us in January 2022. Jackson’s enthusiasm, attention to detail, and pure joy knows no bounds. It’s a difficult job keeping track of the opaque private markets, and he’s done so brilliantly day in and day out. This is his last day on the Term Sheet team, so please send him some love and gratitude. I hope you’ll also join me in welcoming Joseph Abrams to the Term Sheet deals section. As always, please continue to send deal news to termsheet@fortune.com!
Until Monday,
Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Jackson Fordyce and Joseph Abrams curated the deals section of today’s newsletter.
VENTURE DEALS
– Viome Life Sciences, a Bellevue, Wash.-based at-home microbiome test provider, raised $86.5 million in Series C funding co-led by Khosla Ventures and Bold Capital.
– ProjectDiscovery, a San Francisco-based cybersecurity company, raised $25 million in Series A funding. CRV led the round and was joined by Point72 Ventures, SignalFire, Rain Capital, Mango Capital, Accel, Lightspeed, and others.
– Jinx, a Los Angeles, Calif.-based dog food brand, raised $17.85 million in Series B funding. The Merchant Club and Align Ventures led the round and were joined by AF Ventures, ERA Ventures, and Range Group.
– Visana Health, a Minneapolis, Minn.-based virtual-first comprehensive women’s health clinic, raised $10.1 million in seed funding. Flare Capital Partners and Frist Cressey Ventures co-led the round and were joined by InHealth Ventures, Oxeon Partners, Pixel Perfect Ventures, Venture Investors, and others.
– Verdigris, a Mountain View, Calif.-based smart building management company, raised $10 million in funding. DCVC, Solea Energy, and others invested in the round.
– Venteur, a Berkeley, Calif.-based digital health startup, raised $7.6 million in seed funding. GSR Ventures led the round and was joined by Headwater VC, Revelry Venture Partners, Houghton Street Ventures, Plug and Play, Techstars, CRCM Ventures, and others.
– D’Amelio Brands, a Los Angeles-based brand and product growth platform, raised $5 million in funding from Fifth Growth Fund..
– Aircon, a Dallas-based air cargo shipping company, raised $3.3 million in seed funding led by Underscore VC.
– Birdstop, a Concord, Calif.-based remote sensing company, raised $2.3 million in funding. Lerer Hippeau led the round and was joined by Anorak Ventures, Correlation Ventures, Data Tech Fund, Graph Ventures, Techstars, Timberline Holdings, and others.
PRIVATE EQUITY
– Accel-KKR invested €60 million ($65.21 million) into Ocuco, a Dublin-based eye care software solutions provider.
– CES Power, backed by Allied Industrial Partners, acquired Infinite Power, a Beltsville, Md.-based temporary mobile power and climate control solutions provider. Financial terms were not disclosed.
– TPG Rise acquired a majority stake in A-Gas, a Bristol, U.K.-based refrigerant supply and lifecycle management company. Financial terms were not disclosed.
– Truelink Capital acquired Flipp, an Etobicoke, Canada-based marketing technology platform. Financial terms were not disclosed.
– Wealth Enhancement Group acquired First Capital Advisors Group, a Little Silver, N.J.- and Blue Bell, Pa.-based investment advisor. Financial terms were not disclosed.
OTHER
– BAE Systems acquired Ball Aerospace, a Westminster, Colo.-based spacecraft manufacturing company, for $5.6 billion.
– Aldi’s U.S. unit agreed to acquire Southeastern Grocers, a Jacksonville, Fla.-based owner of Winn-Dixie and Harveys supermarket chains. Financial terms were not disclosed.
– OpenAI acquired Global Illumination, a New York-based digital product company. Financial terms were not disclosed.
PEOPLE
– KKR, a New York-based investment firm, hired Charlie Gailliot as a cohead for the firm’s global climate strategy. Formerly, he was with Goldman Sachs.
