Divvy Homes, a startup that facilitates rent-to-own home purchases, said Tuesday it’s raised $110 million in a Series C round.
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Customers work with Divvy to find a home, and then the company purchases the home on their behalf, with the customer contributing about 1 to 2 percent of the home’s value. Customers then rent the home, with about 25 percent of the monthly payment going toward a future down payment, according to the company.
Customers can build up to 10 percent of the value of the home over the course of their three-year lease, but are also free to buy the home at any point during the lease. If a customer decides not to buy the home, they are able to cash out their savings, the company said.
Divvy currently operates in 16 cities across the United States, including Atlanta, Dallas, Phoenix, and Miami.
With the new funding, the company plans to expand into four more markets and add to its 80-employee team, CEO Adena Hefets said in an interview with Crunchbase News.
It also plans to offer more adjacent services for customers looking for a new home, such as an in-house real estate agent. The company is also exploring adding services like title and escrow, along with mortgage services. “It just creates a more consistent customer experience to not be using as many third parties and bring a lot of this stuff in house,” Hefets said.
Divvy says it financed five times the number of home sales last year compared to before the COVID-19 pandemic. Residential home sales in general have been on the rise since the COVID-19 pandemic sparked the work-from-home era and interest rates remain low. Existing home sales in 2020 were the highest they’d been since 2006, according to the National Association of Realtors, and home sales in total rose more than 22 percent year-over-year.
Several other startups in the home-buying space have recently raised notable sums of venture funding, including Doorvest, Propertymate and Rendin. But Divvy Homes’ Series C is the largest venture round raised by a real estate startup in the past month, according to Crunchbase data.
The company, which is based in San Francisco and was founded in 2017, most recently raised a $43 million Series B in September 2019 and is backed by investors including Andreessen Horowitz and Caffeinated Capital.
Illustration: Li-Anne Dias