The company will use the cash to add team members and beef up its technology as it works to disrupt the rent-to-own sector.
Divvy, a startup that aims to disrupt the rent-to-own business, announced Wednesday that its latest funding round hauled in $43 million, which the company plans to spend helping more people become homeowners.
The Series B round came from a group of well-known investment firms including Andreessen Horowitz, Caffeinated Capital and GIC, a fund created by the Singapore government. Homebuilder Lennar was also among the investors, according to a statement from Divvy.
Divvy’s statement adds that the company will use the money to “expand its team of real estate industry experts, increase investment in technology and purchase more homes to accelerate growth.”
“We are forging a new path to homeownership, a life-changing accomplishment currently unavailable to many Americans,” Divvy CEO Adena Hefets said in the statement. “Much of early real estate tech stopped at simply digitizing the archaic, data-heavy processes buyers encounter along the way. We take things further, fundamentally changing who has access to the American Dream.”
Hefets co-founded Divvy in San Francisco in 2016 and the company now operates in Georgia, Tennessee and Ohio. Would-be owners who use Divvy get to pick out a home within a certain pre-determined price range. The company asks the customer to contribute 2 percent of the purchase price, then buys the house on their behalf.
The customer then rents the home back, but with 25 percent of the monthly payment going toward building equity in the house. After three years, the occupant should have accumulated 10 percent equity in the home and can use that as a down payment to buy it from Divvy.
The company doesn’t work with condos, foreclosures and some other properties that have unique circumstances, but would-be homeowners otherwise have wide latitude to choose whatever homes fall within their respective price ranges.
Divvy said in its statement Wednesday that it wants to create “hundreds of thousands” of new homeowners, and that it saves customers an average of more than $5,000.
Divvy previously made headlines last year after it raised $30 million in a funding round led by now-repeat investors Andreessen Horowitz. In May, the company also announced that it had streamlined its online application process and could approve customers in as little as 15 minutes.
In a statement Wednesday, Andreessen Horowitz partner Alex Rampell said that his investment firm — which has backed everything from Facebook to Airbnb to BuzzFeed — is “confident that Divvy will continue causing meaningful disruption in the real estate space, given its unique business model and real impact on wealth creation in America.”
“We know this injection of capital will fuel Divvy’s further growth as it already outpaces the industry,” Rampell added.
All told and with previous funding taken into account, Divvy now has close to $200 million in both debt and equity, according to the company’s statement Wednesday.