Nima Ghamsari in the Beverly Hills home where he has worked during the pandemic as his business exploded and his software powered nearly a third of the U.S. mortgage market.
Ethan Pines for Forbes
Shares of Blend Labs, a San Francisco-based mortgage software company, debuted on the New York Stock Exchange on Friday at $18, hitting the top-line IPO price of $16 to $18 per share.
Blend raised a total of $360 million via yesterday’s IPO and has a market value of almost $4 billion. The offering was led by Goldman Sachs, Allen & Co. and Wells Fargo.
“If you’d asked me two years ago I would have said it doesn’t really make sense for us to go public, maybe ever, as we could run this company privately really effectively,” Blend cofounder Nima Ghamsari told Forbes on Friday. “The reason that we decided to go public was that we serve a really complicated and regulated industry, and they want to know that the partners they rely on are going to be around for a long time.”
Blend was cofounded by Ghamsari, now 35, who emigrated from Iran as a child and went to Stanford University, where he made money for living expenses by playing poker. After graduating from Stanford in 2011, Ghamsari joined secretive big-data startup Palantir Technologies, and at just 26, quit that job to start his own software company with some former colleagues.
“I have always felt like I wanted to bet on myself. I’m willing to take a lot of risk,” Ghamsari told Forbes in June.
Blend’s cloud-based platform is now used by 31 of the top 100 U.S. financial firms, including big mortgage lenders like Wells Fargo and US Bank. The software processes $5 billion worth of loans per day and in 2020, its front-end, white label technology was used to process $1.4 trillion in mortgage and consumer loans, up nearly threefold from the prior year. Its staff grew to 750 this year, up from 425 before the pandemic.
Though it started with mortgages, the company has expanded its product offerings since 2019 to include homeowner’s insurance, as well as home equity and auto loans. In March, it agreed to acquire title-insurance and settlement company Title365 for $422 million, with the aim of integrating even more of the home closing process into its services—and collecting insurance fees.
According to its filings, the startup is well positioned to benefit from the move toward digitization in the financial services sector, which has only been accelerated by the Covid-19 pandemic. By the end of last year, 13.6 million mortgages worth $4.3 trillion had been closed nationwide, shattering the previous all-time record of $3.7 trillion in 2003.
Blend reported a 166% increase in transactions on its platform from March 2020 through the end of the year compared to 2019. The company also reported it had a net loss of $75 million on revenue of $96 million in 2020, compared with a loss of $81 million on revenue of $51 million the previous year.
Ghamsari also stands to earn a big payout—$10.9 billion by Forbes’ calculations—if the company’s stock skyrockets in the years after going public and hits every single incentive award outlined in his compensation agreement. Blend’s board of directors awarded Ghamsari a total of 78.2 million stock options with an exercise price of $2.86 a share that vest over a 10-year period, depending on how the stock performs.
“In 10 years, finance is going to be truly digital and proactive in real time,’’ Ghamsari says. “(Blend) will be one of the biggest companies in the world.”
Blend is a standout on this year’s Forbes’ Fintech 50, which celebrates private startups transforming financial services. Counting Blend, at least four members of the 2021 Fintech 50 are considering listing on the public markets.