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Rent-to-own startup Divvy Homes Inc. implemented another round of layoffs Wednesday, handing out pink slips to high-ranking employees, including the head of growth marketing, the company’s IT manager and a senior product manager, according to public posts on LinkedIn.
Although Divvy has not yet responded to requests for comment, a half-dozen former employees posted on LinkedIn that they were affected, including a software engineer, business operations analyst, and home operations “servant-leader.”
“Almost a year ago I left Marcus by Goldman Sachs to take the role of Head of Growth Marketing at an amazing startup Divvy Homes which was disrupting the real estate market,” Josh Harary posted on LinkedIn. “As with many others in my network, these challenging economic times have [led] to layoffs here as well and unfortunately I was impacted today.”
San Francisco-based Divvy laid off about 12 percent of its workforce in September, or about 40 people, citing “worsening economic conditions.”
“Although we recognized these macroeconomic challenges in late summer 2022 and took steps to substantially reduce our cost structure in response, it unfortunately was not enough,” a company spokesperson said at the time. “Realistically, the macro environment is likely to remain volatile and challenging for the foreseeable future. As a result, we needed to adjust headcount to reflect the new reality today.”
A $200 million Series D raise in August 2021 that valued the company at $2 billion was followed by $735 million in new debt financing just two months later.
In October, the publication Fast Company analyzed rents advertised by Divvy on 18,000 properties in 19 markets and concluded that the company charges higher rents than other landlords in some markets. Fast Company said a review of court cases and interviews with renters also found that the company had stepped up evictions of clients and could be slow to make repairs.
Divvy told Fast Company that while half of its customers become homeowners, evictions are “an unfortunate part of our business” but that the company’s eviction rate is in line with the national average.
But Fast Company concluded that Divvy is one of the top-10 net acquirers of single-family homes in the U.S. and “arguably more insulated than its Silicon Valley peers from the ups and downs of the housing market for a simple reason: Its business model does not rely on homeownership as an outcome.”