Many proptech startups, born and funded during the low-interest-rate heydays, are in the throes of struggle. With investments into U.S.-based real estate startups falling from $11.1 billion in 2021 to $3.7 billion last year, according to PitchBook data, some are selling themselves off, while others are closing shop.
The two most recent examples are the latest casualties of a challenging interest rate environment and the years-long slowdown in real estate fintech funding.
Rent-to-own proptech startup Divvy Homes is being acquired by Charleston, South Carolina-based Maymont Homes, Fast Company reported last week. Maymont is a division of Brookfield Properties.
EasyKnock abruptly shut down, NPR reported last month. This closure followed several lawsuits filed against the proptech company and an FTC consumer alert about its controversial sale-leaseback models, which involved buying homes from the owners and simultaneously leasing the homes back to them.
While 9-year-old Divvy declined comment, a source familiar with the matter confirmed to TechCrunch that Divvy is having conversations with Brookfield and is “close to signing a purchase agreement.” This person disputed that the acquisition was a fire sale. However, neither the company nor the source shared how much Brookfield could pay for Divvy, so it’s not yet clear if the price is a bargain or a boon.
Its sale, fire or not, isn’t entirely a shock. Signs of trouble began appearing at Divvy in 2022, when the company began laying off staff. By November 2023, Divvy had conducted its third layoff in a year’s time.
The once-buzzy startup had 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. 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 Series D round was announced just six months after a $110 million Series C. Divvy Homes’ last known valuation was $2.3 billion in 2021, according to PitchBook.
EasyKnock, a startup that billed itself as the first tech-enabled residential sale-leaseback provider, was founded in 2016 and had raised $455 million in funding from backers, including Blumberg Capital, QED Investors, and Northwestern Mutual’s corporate venture arm, according to PitchBook data. Approximately $200 million of that capital was in a form of debt that allowed the company to buy the homes, according to a person familiar with the startup.