Blend announced Wednesday it has raised a $75 million Series F round at a valuation of nearly $1.7 billion, making it officially a unicorn.
Fintech-focused Canapi Ventures led the investment, which brings Blend’s total venture raised to $365 million since its 2012 inception. The company nearly reached unicorn status last summer with its $130 million Series E raise. Existing backers Temasek, General Atlantic, 8VC, Greylock, and Emergence also participated in the round.
When we interviewed Blend CEO and co-founder Nima Ghamsari last month, he hinted that another funding might be coming.
This morning, Blend President Tim Mayopoulos (and former CEO of Fannie Mae) told me that Blend didn’t necessarily “need” the funding but saw the value in accelerating its product development plans. The company also was attracted to having a strategic investor such as Canapi, a $545 million fund which was co-founded by Gene Ludwig (founder of Promontory Financial Group) and Chip Mahan (Live Oak Bancshares CEO). Among its dozens of limited partners are major banks, which are the kinds of customers Blend is servicing, Mayopoulus pointed out.
Also, there’s no doubt that the economic situation around the COVID-19 pandemic has placed pressure on lenders to offer remote solutions while keeping up with record loan volumes.
To that end, Blend plans to use the new capital to invest in product development such as speeding up the release of its digital closing solution.
“The mortgage industry has been moving in the direction of being more digital. The pandemic has clearly accelerated that,” Mayopoulos said. “And the rate of acceleration has been quite impressive.”
That digitization, he said, has been fueled by rapidly changing consumer expectations and increased confidence in the ability of lenders and other mortgage industry players to adopt new technologies quickly.
“Virtually every aspect of mortgage lending can be improved through digitization,” Mayopoulos added. “And we’re interested in delivering the type of closing that meets any consumer’s needs, whether it be completely digital, a hybrid of in-person or digital, or an old-fashioned in-person closing. It’s really about meeting the consumer where he or she is.”
With loan volume being off the charts, Blend recognizes the potential for greater consumer disappointment if a lender can’t get to a loan or it takes months to fulfill a loan. It aims to help speed up the process in general so that lenders can move faster and keep their customers more satisfied.
As such, Blend also is keen on delivering what Mayopoulos described as “an end-to-end experience” for lenders to better serve consumers. Its new capital will go toward investing more in its products and services, and continued hiring. The company has already onboarded more than 130 people since the beginning of the year.
“In addition to applying for loans digitally, consumers should have the ability to take care of everything else they want,” he said. “We’re looking at other aspects of the home-buying journey to build that out end to end.”
Among the new products Blend has introduced this year are its digital closing solution for mortgages and home equity loans, a mobile app for loan officers and new reporting tools for lenders.
Over time, Blend (which was one of HousingWire’s 2020 Tech 100 winners) has steadily grown to be a powerhouse in the mortgage tech industry. Blend’s white label technology is what powers mortgage applications on the site of banks such as Wells Fargo and U.S. Bank 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 over $3.5 billion in mortgages and consumer loans per day in partnership with over 250 financial institutions, up from nearly $2 billion and over 150 lender customers last June. Blend’s customer base accounts for more than 25% of the $2.1 trillion U.S. mortgage market by origination volume, according to HMDA data. In 2019, Blend processed a total of $538 billion in loans, more than double the $211 billion worth it processed in 2018. So far this year, it’s processed $771 billion in loan volume.
Like many others in the mortgage industry, the startup has seen a big jump in business since the COVID-19 pandemic began. Refinance applications for the second week in March were up more than 1600% compared to the prior year. In both April and May, refi apps were up more than 600%, according to the company.