The company also made headlines in October 2022 when Fast Company analyzed rents advertised by Divvy and determined that the company charged higher rents than other landlords in some markets, had ramped up evictions of clients and “could be slow to make repairs,” as reported by Inman. According to The Mortgage Reports, “ mortgage rates entered August below 7%, but by the end of the month, they had soared to 7.23%, a level not seen in over two decades, according to Freddie Mac’s records.” By last week, they had jumped even higher with the average rate on 30-year fixed mortgages climbing to 7.42%, according to Bankrate.įor companies like Divvy Homes, which purchased homes as part of its business model, the rise has been devastating - limiting its ability to purchase homes and make money off those buys. But since March 2022, when the Federal Reserve embarked on a mission to curb inflation, interest rates have soared. Mortgage rates dropped to historic lows in 2020, driven by the COVID-19 pandemic. Divvy Homes' last known valuation was $2.3 billion in 2021, according to PitchBook. The Series D round was announced just six months after a $110 million Series C. Divvy's last known funding occurred in August 2021 - a $200 million Series D funding led by Tiger Global Management and Caffeinated Capital at a $2 billion valuation. The once-buzzy startup has raised more than $700 million in debt and equity from well-known investors such as Tiger Global Management, GGV Capital and Andreessen Horowitz (a16z), among others. In its heyday, Divvy Homes claimed to be different from other real estate tech companies because it worked with renters who wanted to become homeowners by buying the home they wanted and renting it back to them for three years “while the savings needed to own it themselves.” That followed a September 2022 layoff of about 40 people, or some 12% of its workforce at the time, as reported by Inman. The economics of the company don't work when interest rates are this high, and it's likely the company won't be close to fully operational until interest rates go down."ĭivvy laid off in February an unknown number of people, including the company’s head of growth marketing, according to real estate publication Inman. The source added: "The layoffs were attributed to the macroeconomic climate, the current cost of capital, and the need to conserve cash. TechCrunch reached out to Divvy Homes for additional details but had not heard back at the time of writing. Doing the math, that means it likely had just under 200 employees prior to the cuts. It's not known how many employees remain at the company.Ī source familiar with internal happenings at Divvy said the most recent round of layoffs made up almost half the company.
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