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Masa invests $500M in Vishal Garg’s Better Mortgage

Masayoshi Son (Credit: SoftBank Group)

SoftBank Group is investing $500 million in mortgage lender at a $6 billion valuation, according to the Wall Street Journal. The Japanese tech conglomerate is buying shares from the company’s existing investors at a sharp jump from the $4 billion valuation at which it raised money in November. 

  • What they do: The online lending platform simplifies the home lending process by connecting prospective buyers with lenders. They seek to reduce costs and inefficiencies imposed by traditional brokers and intermediaries. Amid a frenzy in pandemic-induced refinancing, Better reportedly extended $25 billion in loans last year and $14 billion in the first quarter of 2021 alone.
  • Unresolved Issue before looming IPO: CEO Vishal Garg was recently accused of improper management of funds at several prior startups, including as much as “tens of millions of dollars,” Forbes reported. Some of the allegedly mismanaged money went to starting this venture.
  • Why it matters: Garg’s legal woes could present a challenge to a public offering. Goldman Sachs, which invested in the venture, previously accused entities controlled by the CEO of “flagrant self-dealing”. And while the bank dropped its legal claims in October, Garg is still facing accusations by PIMCO that startups he controlled siphoned off money owed to investors.
  • Dig Deeper: Meanwhile, Garg has been battling a former business partner Raza Khan, who claims Garg transferred $3 million from a joint business to his personal bank account, and used that money to launch, Forbes noted. Garg denied the claim in a countersuit. But in a deposition, things grew so heated Garg threatened to burn Khan alive. Garg later apologized for letting his emotions get “out of control.”
  • Funding to date: The investment brings the company’s total funding raised to over $900 million since its inception in 2014. Other backers include Goldman Sachs, Kleiner Perkins, American Express, Activant Capital, and Citi.
  • Masa plays by his own rules: In a sign of its eagerness to put money into the venture, SoftBank agreed to give all of its voting rights to Vishal Garg. Better is expected to go public later this year. [WSJ+TechCrunch+CNBC+Forbes]

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