GIC participates in Divvy Homes US$200M series D financing

U.S. one-dollar currency notes; taken September 2018.U.S. one-dollar currency notes; taken September 2018.

U.S.-based Divvy Homes completed a US$200 million series D equity financing round six months after announcing its US$110 million series C round, valuing the company at around US$2 billion, the rent-to-own housing player said in a press release Friday.

The round was led by Tiger Global Management and Caffeinated Capital, with participation from existing investors, including Andreessen Horowitz, GGV Capital, GIC and Moore Specialty Credit, the statement said.

The fresh funding is earmarked for market expansion, to launch new partnership channels and for acquisition channels, the statement said.

The series C round was also led by Tiger Global Management, with participation from Andreessen Horowitz, Jaws Ventures, GGV Capital according to Crunchbase data. Overall, Divvy Homes has raised US$490 million from 15 investors, the data showed.

Adena Hefets, co-founder and CEO of Divvy Homes, noted that U.S. homeownership levels have fallen to record lows over the past decade amid rising home prices and stricter underwriting, exacerbated by the Covid-19 pandemic.

“We’re the first real estate platform that helps you save for a down payment while you live in your dream home. We are a tech-driven real estate platform, not a rental business,” she said in the statement.

Scott Shleifer, a partner at Tiger Global, estimated Divvy Homes could help more than 100,000 families become homeowners, with the new round to help the company expand its footprint.

Currently, the company operates in 16 markets across Georgia, Texas and Florida, with cumulative qualified applicants and monthly homes closed under the three-year program up by three times since the series C closed, the statement said. Customers have exercised their option to purchase the homes at an around 40 percent rate, Divvy Homes said, estimating that to be around 10 times the rate of its major competitors.

To use the service, customers fill out a short application, which results in an approved home-buying budget and a connection with a real-estate agent, Divvy Homes said.

Once the customer finds a home, Divvy Homes purchases the property, with the renter contributing 1-2 percent of the home value toward their down payment savings, with up to 25 percent of each monthly payment going toward the downpayment. That sets customers up to apply for a traditional mortgage when they are ready, it said.

Over the three-year lease period, a customer will build up to 10 percent of the home value in savings, and can buy the home at any time, Divvy Homes said, adding the customer can also walk away and cash out their savings if they change their mind.