Fundraising haul impressive
House-flipper Opendoor has raised $325 million in a Series E funding round at a reported $2 billion valuation. This brings the total equity raised to $645 million, according to CNBC who reported the news.
How it works: Opendoor makes an offer to buy an owners house within 24 hours of an online submission. Although the seller gets less money by foregoing a traditional marketing process, Opendoor offers convenience and certainty.
How they monetize:
- Commision: OpenDoor charges around an 8 percent fee from the seller.
- Flip: After acquiring the house, OpenDoor makes basic improvements and re-sells it.
- Side services: The firm offers title insurance services and helps buyers secure mortgages.
- Buy and flip: Although the company raises money as a tech Unicorn, their approach is not novel in the real estate world. Essentially, they bring an antiquated process online where one can sell a house with greater efficiency and simplicity.
Takeaway: Key to success in the real estate tech space is to utilize technology and work within the confines of the existing market model. Radical disruption is unnecessary.