Divvy Homes raises $110M in Series C to ensure millions of Americans can access the country's primary wealth-builder: homeownership
SAN FRANCISCO (PRWEB) February 02, 2021
Divvy Homes announced a $110 million Series C equity funding round to ensure millions of Americans can access the country's primary wealth-builder: homeownership. 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, Divvy supports future homeowners by purchasing a home on their behalf and renting it back to them while they build equity in the property. By creating this new category, 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.
“What Divvy has accomplished is phenomenal, even more so considering the impact of COVID 19,” says Scott Shleifer, Partner, Tiger Global. “The Divvy team has built a company that enables more Americans to own a home. Over the next ten years we believe they could help over one hundred thousand families become financially responsible homeowners.”
Divvy will use the proceeds of this equity raise for further market expansion, with plans to serve more than 70 million Americans in over 20 markets by the end of the year. Additionally, Divvy will launch adjacent product offerings that create a seamless end-to-end home buying experience.
“Divvy has created a new category of homeownership that addresses the changing American household, providing a safe way to save and build wealth for those who cannot access a traditional mortgage,” says Alex Rampell of Andreessen Horowitz. “Teachers, nurses, and others who are the backbones of our communities are among the groups who benefit the most from the Divvy model, and it’s been inspiring to watch Divvy set so many on a path to homeownership that works for them.”
How it Works
Divvy partners with customers along every step of the home buying process, with the goal of helping renters transition into homeownership. Buying a home with Divvy starts with a five-minute application that results in an approved home buying budget and an introduction to a real estate agent.
Once the customer finds their forever home, Divvy purchases the property, while the renter contributes an initial 1-2 percent of the home value to officially step onto the path to homeownership.
Approximately 25 percent of each subsequent monthly payment goes toward saving for a down payment, setting customers up to apply for a traditional mortgage when they are ready. A customer builds up to 10% of the value of the home over their three-year lease, but they can buy the home at any time. If a customer changes their mind, they can walk away from the home and get cashed out for their savings. Divvy provides the flexibility of renting with the freedom and wealth-building power of homeownership.
Divvy is on a mission to make homeownership more accessible to American families. The program is currently available across 16 major U.S. metropolitan areas: Atlanta, GA; Cincinnati, OH; Cleveland, OH; Dallas, TX; Denver, CO; Ft Lauderdale, FL; Houston, TX; Jacksonville, FL; Memphis, TN; Minneapolis, MN; Miami, FL; Orlando, FL; Phoenix, AZ; San Antonio, TX; St. Louis, MO; and Tampa, FL. Divvy is backed by a16z, Caffeinated Capital, GGV Capital, GIC, JAWS Ventures, Lennar, Moore Specialty Credit, SciFi VC, and Tiger Global Management. Divvy was incubated in Max Levchin's startup studio HVF, and co-founded by Adena Hefets, Nick Clark and Alex Klarfeld.