Masa’s SoftBank continues to deploy war chest
House-flipper Opendoor has raised $400 million from SoftBank at a valuation north of $2 billion. This brings the total equity raised to $1.045 billion. according to TechCrunch.
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, the startup offers convenience and certainty.
How they monetize:
- Commision: OpenDoor charges around an 8 percent fee from the seller.
- Buy and 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.
Takeaway: Key to success in the real estate tech space is to utilize technology and work within the confines of the existing market model. Although the company raises money as a tech unicorn, their strategy isn’t novel.