San Francisco-based real estate startup Divvy Homes announced on February 2, 2021, that it raised $110m in Series C equity funding.
The company plans to use the raised equity capital in boosting business growth to serve more than 70 million Americans in over 20 markets beyond cities such as Tampa, Dallas, Denver and Atlanta by the end of the year.
Investment firm Tiger Global Management LLC led the funding round along with Jaws Ventures, Moore Specialty Credit, GGV Capital, and other current investors in the company. Divvy Homes has raised debt, and equity capital of over $500 million in total, inclusive of the new funding, was earned in equity and two-thirds in debt with approximately one-third of that.
Divvy Homes was started in 2017 and was founded by Alex Klarfeld, Nick Clark and Adena Hefets. The company, now led by the CEO, Adena Hefets, helps potential homeowners buy a home on their behalf, with the customers contributing about 1 percent to 2 percent of the property’s value. Divvy Homes then rents the home back to the customers with about 25 percent of the monthly payment going toward a future down payment as they develop equity in the property. During their three-year lease, a client builds up to 10 percent of the value of the house, although they can purchase the home at any time. If clients change their minds, they can walk away from home and get their money cashed out.
During COVID-19 global pandemic, when economic volatility caused the real estate and housing industry to become extremely difficult to access, Divvy's mission became even more significant and essential. Divvy extended operations from eight to 16 markets over the course of 2020 and supported five times as many homes as it had during pre-pandemic times. Divvy Homes is currently available across 16 major US metropolitan areas and last raised $43 million in Series B funding backed by investors including Caffeinated Capital and Andreessen Horowitz.
With this fresh round of funding, the 80-person startup ideates to take its service a step ahead by launching associated product offerings to take customers throughout the home buying cycle. From supplying realtors to acting as a lender, Divvy wishes to "create a complete end-to-end experience." This tech-enabled homeownership platform’s annual revenue is well above $20 million. It focuses on closing the disparity in housing affordability by providing the average American households with trustworthy and effortless homeownership items.