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Many proptech startups , born and fund during the humbled - interest - rate heyday , are in the throe of struggle . With investments into U.S.-based real estate startup falling from $ 11.1 billion in 2021 to $ 3.7 billion last year , according to PitchBook data , some are selling themselves off , while others are closing workshop .
The two most late example are the late casualties of a challenging interest rate surroundings and the age - longslowdown in real estate fintech funding .
Rent - to - own proptech startup Divvy Homes is being acquired by Charleston , South Carolina - free-base Maymont Homes , Fast Companyreportedlast hebdomad . Maymont is a division of Brookfield Properties .
EasyKnock abruptly exclude down , NPRreportedlast calendar month . This closure followedseveral lawsuit filed against the proptech companyand anFTC consumer alertabout its controversial sale - leaseback models , which ask buying menage from the owner and simultaneously rent the homes back to them .
While 9 - twelvemonth - old Divvy declined gossip , a origin familiar with the matter confirmed to TechCrunch that Divvy is have conversation with Brookfield and is “ stuffy to bless a purchase correspondence . ” This soul disputed that the acquisition was a flack sale . However , neither the company nor the source shared how much Brookfield could pay for Divvy , so it ’s not yet clear if the cost is a bargain or a boon .
Its sales agreement , fire or not , is n’t entirely a impact . signal of trouble began come along at Divvy in 2022 , when the company began pose off faculty . By November 2023 , Divvy had conducted its third layoff in a year ’s time .
The once - buzzy inauguration had raise more than $ 700 million in debt and equity from well - fuck investors such as Tiger Global Management , GGV Capital , and Andreessen Horowitz ( a16z ) , among others . Divvy ’s last know funding occurred in August 2021 — a $ 200 million Series D fundingled by Tiger Global Management and Caffeinated Capital at a $ 2 billion evaluation . The Series D round was announced just six calendar month aftera $ 110 million Series C. Divvy Homes ’ last known valuation was $ 2.3 billion in 2021 , according toPitchBook .
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EasyKnock , a inauguration that billed itself as the first technical school - enabled residential sales event - leaseback provider , was establish in 2016 and had call forth $ 455 million in financial backing from backers , including Blumberg Capital , QED Investors , and Northwestern Mutual ’s corporate speculation arm , concord to PitchBook data . just about $ 200 million of that capital was in a form of debt that allowed the company to grease one’s palms the home , consort to a individual intimate with the startup .
So what run wrong ?
In its heyday , Divvy Homes claimed to be unlike from other real the three estates technical school companies because it worked with renters who want to become homeowners by buying the home they wanted and rent it back to them for three age while they built “ the savings needed to own it themselves , ” it said .
But the Federal Reserve began raising stake rate in 2022 on a delegation to curb inflation . For companies like Divvy Homes , which buy homes as part of its business mannikin , high rate were annihilating , throttle its power to purchase home and make money off those buys .
EasyKnock ’s business concern modelling also call for buy dwelling and renting them . But its placement attracted homeowner with poor quotation score because it gave them access to quick hard currency , along with the option to repurchase the nursing home at a next appointment .
eminent interest rates also ache it , as it took on debt to finance its mathematical process , sources intimate with the company told TechCrunch . But EasyKnock had extra problem . More thantwo twelve lawsuits were file againstEasyKnocks , andMichigan lawyer generalalleged that the ship’s company used “ deceptive practice ” by purchasing homes from those in financial tension at modest prices and then commit them high-pitched rents .
allot to our sources , EasyKnock was insolvent when it shut down , overburdened by debt .
And with interest pace still relatively high , and support still difficult to come by , we can likely expect more of this character of news from the real estate of the realm fintech blank space in the coming month and perhaps for all of 2025 .
Are you aware of a proptech startup in trouble ? liaison Mary Ann atmaryann@techcrunch.comor via Signal at 408.204.3036 or Marina.temkin at techcrunch.com .
This floor was update post - publication on January 18 to clarify the type of sales event that Divvy is reportedly in talks to complete .
