Divvy Homes has raised a $110 million venture round led by Tiger Global Management, TechCrunch first reported. The startup aims to help more people buy houses by renting back to them while they build equity.
How it works: Customers pick out a home and Divvy purchases it on their behalf with the renter contributing an initial 1-2% of the home value. They move in at closing, and pay a monthly amount.
Monthly payment breakdown: Part of the monthly amount is a “market-rate” rent and about 25% goes toward building up savings in the house The renters can choose to cash out their equity or purchase the home before the three years are up.
Other backers include: a16z, Caffeinated Capital, GGV Capital, GIC, JAWS Ventures, Lennar, Moore Specialty Credit, and SciFi VC.
Heard in the Valley: Co-founder and CEO Adena Hefets: “During COVID-19, new mortgages became difficult to secure as banks tightened underwriting requirements for approvals. As a result, families were locked out of homeownership opportunities during a global pandemic—a time when they needed safety and shelter most. Divvy stepped up in place of traditional financing.” [TechCrunch+PR]