Rent-to-own startup Divvy Homes raises $110 million to let home shoppers become homeowners without a mortgage
Back in December, we featured Divvy Homes in our list of the ten most successful tech startups of 2020. Divvy is a real estate tech startup addressing the housing affordability crisis across the U.S. with a flexible homeownership model for hard-working American families. Divvy lets home shoppers become homeowners without the need to pay more or buy a mortgage. Divvy helps you rent your dream home while also helping you save for a down payment. You can buy the home directly from Divvy or simply walk away and cash out your savings.
Today, the San Francisco, California-based Divvy Homes announced it has closed a $110 million Series C equity funding round to grow its operations. The round was led by Tiger Global Management, with participation from GGV Capital, Moore Specialty Credit, JAWS Ventures, and existing investors, the round brings the total debt and equity capital Divvy Homes has raised to over $500 million.
Founded in 2017 by Adena Hefets, Alex Klarfeld, Brian Ma, and Nicholas Clark, Divvy supports future homeowners by purchasing a home on their behalf and renting it back to them while they build equity in the property. Divvy was incubated in Max Levchin’s startup studio HVF by Adena Hefets, previously of Square and Brian Ma, previously of Zillow, along with co-founders Nick Clark and Alex Klarfeld. With Divvy, renters select any home on the market, Divvy purchases it, and the renter builds homes savings with every payment.
Divvy empowers renters to become owners. By fractionalizing ownership in homes, its customers begin to earn equity before they outright own thereby re-igniting the dream of homeownership and providing a real wealth-building opportunity along the way.
By creating this new category of homeownership, Divvy provides a bridge from renting to owning that allows the average American household to build towards homeownership in a more affordable and flexible manner. Divvy’s mission became even more crucial during COVID-19 when economic volatility caused the housing market to become increasingly challenging to access.
“At the start of the pandemic, we made a commitment to help and support as many future homeowners as possible,” said Adena Hefets, co-founder and CEO of Divvy Homes. “During COVID-19, new mortgages became difficult to secure as banks tightened underwriting requirements for approvals. As a result, families were locked out of homeownership opportunities during a global pandemic—a time when they needed safety and shelter most. Divvy stepped up in place of traditional financing.”
Over the course of 2020, Divvy expanded operations to 16 total markets and financed 5x the number of home purchases compared to pre-pandemic levels. For its existing customers who experienced hardship due to the pandemic, Divvy provided flexibility and support in the form of rent relief, including waived late fees, flexible payment scheduling, and temporarily suspending the savings portion of their monthly payment. Most importantly, Divvy put thousands of families on a path of saving towards and eventually owning their own home.