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The$1 billion acquisitionof rent - to - own inauguration Divvy Homes , which was announced Wednesday , is gestate to leave some shareholders without a payout , grant to sources familiar with the deal .
The terms — and Divvy ’s journeying from buzzy startup to acquisition mark — reflect the curler - coaster drive the proptech industry has been on over the past decade .
The San Francisco - based startup , founded in 2016 , had fire more than $ 700 million in debt and fairness from well - known investors such as Tiger Global Management , GGV Capital , and Andreessen Horowitz ( a16z ) , among others . By 2021 , the company was valued at $ 2.3 billion .
While the Brookfield Properties purchase of Divvy for $ 1 billion was at half of its apex valuation , the accomplishment could still be consider a winnings in an industry that has had a drawing string of shutdowns and bankruptcies .
However , it ’s a loss for some shareholders , according to a letter from Divvy CEO and co - founder Adena Hefets that was viewed by TechCrunch .
“ If the transaction closes , Divvy will betray considerably all of its assets , namely its menage portfolio and marque , to Brookfield for more or less $ 1 billion . However , after repaying its striking indebtedness , dealings cost , and extermination druthers to preferred shareholders , we unluckily approximate that neither usual shareholders nor holders of the Series FF best-loved stock certificate will receive any consideration , ” harmonise to the letter , which was sent to shareholders , former employee , and “ Divvy admirer . ”
FF prefer stock , also known as Founders Preferred Stock , is a type of stock that is issued to founders of a company . The law firm Cooley defines the ploughshare as being issued to founders “ at the sentence of incorporation so as to facilitate sale of line by founder in connection with future equity financings . ”
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TechCrunch has reached out to Hefets and Divvy Homes for scuttlebutt and will update the article with any reception .
Another beginning told TechCrunch that fairness holders “ got zero’d ” so “ founder , employees and VCs ” will get “ nothing ” from the sale . The identicalness of the root , who postulate to stay anon. , has been verified by TechCrunch .
Divvy operated a rip - to - own example in which it worked with renter who desire to become homeowners by buy the plate they want and lease it back to them for three years while they built “ the rescue demand to own it themselves , ” it said .
The company run into some hiccups when mortgage interest rates began to surge in 2022 , lead it to conductthree known round of layoffsin a year ’s time . Divvy ’s last known financial support happen in August 2021 — a $ 200 million Series Dled by Tiger Global Management and Caffeinated Capital . The Series D round was announced just six calendar month aftera $ 110 million Series C.
Hefets also shared in the letter the “ decision to sell was n’t easy ” and “ add up after a thorough reappraisal of Divvy ’s strategic alternatives … and with significant advisement around our options . ”
She said the move followed “ years of fighting hard market conditions , including rising interest rate , and making as many cost cuts as possible . ”
As the company looked into what lay ahead in 2025 , it decided the best way forrard was to sell its “ portfolio of home now and return as much capital as possible to shareholders . ”
“ With almost a 10 of pouring myself into this company , and think in this mission , this was not the ending I had hoped for … While I am not gallant of the fiscal final result , I am proud of the impingement we had on our client ’ life , ” Hefets summate .
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