The next step for a successful startup after a Series C financing round is often an IPO – and these days it is often via a merger with a special purpose vehicle (SPAC).
For Divvy Homes, the proptech startup that announced a $ 110 million Series C just six months ago, it turns out that the next step after a Series C … is a $ 200 million Series D, which valued the company at $ 2 billion.
Divvy Homes’ accelerating growth “caught the attention of its key investors,” Tiger Global Management and Caffeinated Capital, who “beat the D series,” the company announced on Friday.
The latest financing round, in which the existing investors Andreessen Horowitz, GGV Capital, GIC and Moore Specialty Credit are also involved, brings the total amount raised by Divvy Homes to more than 700 million US dollars.
Divvy Homes plans to use the money to “drive market expansion, introduce new partnership channels and … efficiently use new capital against ROI-positive acquisition channels”.
San Francisco-based Divvy Homes buys homes on behalf of clients who add 1 to 2 percent of the property value to their down payment savings while they rent. Up to 25 percent of their monthly payments go towards saving for a down payment, with the goal of making a 10 percent down payment after three years and buying the house on a traditional mortgage. They are free to change their minds and cash out their savings if they choose not to buy.
“We’re the premier real estate platform to help you save on a down payment while living in your dream home,” Co-Founder and CEO Adena Hefets said in a statement. “We are a technology-driven real estate platform, not a rental company. We are a home ownership program, not a landlord. “
In a speech at Inman Connect last month, Hefets emphasized that Divvy Homes can be a tool for agents who receive the full commission.
“I’m thinking about these tools, let’s say in your market 20 percent of the population could take out a mortgage and everyone else would be renters,” Hefets said at the time. “You can now get 40 percent or 60 percent of the population homebuyers … so that’s the real goal of getting more consumers and getting them homebuyers.”
Since announcing a Series C funding round in February, Divvy Homes has said its cumulative qualified applicants and homes closed each month have tripled.
Last year, the number of real estate agents working with Divvy Homes tripled to 25,000, the company said.
Divvy Homes currently operates in 16 markets including Atlanta, Cincinnati, Cleveland, Dallas, Denver, Houston, Memphis, Minneapolis, Phoenix, San Antonio, and St. Louis, Missouri. The company is expanding its presence in Georgia, Texas, and Florida, where it operates in Ft. Lauderdale, Jacksonville, Miami, Orlando, and Tampa.
In an interview, Hefets said the latest round of funding will allow the company to invest in its agent success team and hire more people to “bring on board any agent who wants to sign up.”
Hefets said that in addition to real estate agents, Divvy Homes will seek to grow its business through new partner channels like LendingTree and through more content and offline marketing. The company is also looking into partnerships with home builders, who often have a home or two in a given community that have not yet been sold, she said.
When asked about the benefits of raising capital through another private round instead of going public, Hefets said the Series D valuation was attractive and that private fundraising gave the company more leeway to think long-term.
“We had considered all the options,” said Hefets. “From my point of view, a SPAC makes sense for companies that want access to liquidity or capital, but cannot access it in the private market.”
But going public, she said, “puts a strain on the organization. You work quarter to quarter, it’s a different mindset. We might think about it in the future, but right now we won’t see it as long as we can enter the private market [a reason to] still go public. “
Publisher’s Note: This story has been updated with additional perspectives from Divvy Homes co-founder and CEO Adena Hefets.
Email Matt Carter