Property Tech Startup Divvy Homes Raises $200M At $2B Valuation

Tiger Global, Divvy Homes, Startup

Rent-to-own property technology firm Divvy Homes raised $200 million co-led by Tiger Global Management and Caffeinated Capital, giving the startup a valuation of $2 billion, Bloomberg reported on Friday (Aug. 13).

Divvy Homes purchases residential properties on behalf of renters and assists them in becoming owners. Current backers and others also participated in the funding, including Andreessen Horowitz, Singapore’s GIC, GGV Capital, and Moore Specialty Credit.

“We’re aiming to bring a legitimacy to alternative home financing options,” Divvy Homes CEO Adena Hefets told Bloomberg.

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The Silicon Valley startup was launched in 2017 by Hefets, Nicholas Clark, who serves as chief technology officer, and Alex Klarfeld, managing director. The company works across the U.S. and aims to make homeownership a possibility to those who would normally be shut out.

“Over the next 10 years, we believe Divvy Homes has the potential to help more than 100,000 families become financially responsible homeowners,” Tiger Global partner Scott Shleifer told told Bloomberg. 

Shleifer added Divvy is just one of a number of companies that are working to disrupt the traditional homeownership process.

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Tough underwriting requirements by mortgage firms combined with escalating property prices block many from buying a house in the U.S., per the article. Divvy gives people a budget to look for a house and then charges a deposit of 1-2 percent of the property value, and buys the home. The monthly payments are made to Divvy and up to 25 percent is set aside for a deposit so renters have a better chance of getting a mortgage down the road.

“A future goal is to launch a 30-year program which gives customers enough time to fully own their homes,” Hefets told Bloomberg.

The startup has had over 750,000 people apply to participate in the program and the company is growing at a quick pace, with the number of cumulative qualified applicants and acquisitions of homes per month tripling since its $490 million valuation in February. Divvy works with close to 25,000 realtors, triple the number from a year ago, Hefets told Bloomberg.