From $2.3 Billion Valuation to $1 Billion Sale: The Rise and Fall of Divvy Homes

Divvy Homes, the San Francisco-based rent-to-own startup, has been acquired by Brookfield Properties for $1 billion. But don’t let the billion-dollar price tag fool you—this deal is a bittersweet ending for a company once valued at $2.3 billion. For some shareholders, it’s a gut punch: they’re walking away with nothing.

“If the transaction closes, Divvy will sell substantially all of its assets… However, after repaying its outstanding indebtedness, transaction costs, and liquidation preference to preferred shareholders, we unfortunately estimate that neither common shareholders nor holders of the Series FF preferred stock will receive any consideration.”

— Adena Hefets, Divvy CEO and Co-Founder

The Proptech Rollercoaster: A Decade of Highs and Lows

Divvy’s journey is a microcosm of the proptech industry’s wild ride over the past decade. Founded in 2016, the company raised over $700 million from heavyweights like Tiger Global, GGV Capital, and Andreessen Horowitz. By 2021, it was flying high with a $2.3 billion valuation. But the winds shifted in 2022 when mortgage rates skyrocketed, forcing Divvy to lay off employees and scramble for survival.

• 2021: $200 million Series D funding led by Tiger Global.
• 2022: Three rounds of layoffs as interest rates surged.
• 2023: Sold for $1 billion—less than half its peak valuation.

Who’s Left Holding the Bag?

According to sources, equity holders—founders, employees, and VCs—are getting zilch from the sale. The $1 billion payout will first cover debts, transaction costs, and preferred shareholders, leaving common shareholders and Series FF preferred stock holders empty-handed. FF preferred stock, often issued to founders, was supposed to be a golden ticket. Instead, it’s turned into a cautionary tale.

“Equity holders got zero’d. Founders, employees, and VCs will get nothing.”

— Anonymous Source Verified by TechCrunch

The Rent-to-Own Dream: A Noble Mission, a Tough Reality

Divvy’s mission was simple yet ambitious: help renters become homeowners. The company would buy homes, rent them back to tenants for three years, and give them time to save for ownership. But rising interest rates and a challenging market turned this dream into a nightmare. Despite cost-cutting measures, Divvy couldn’t outrun the storm.

In a heartfelt letter to shareholders, CEO Adena Hefets admitted the decision to sell wasn’t easy. “With almost a decade of pouring myself into this company, and believing in this mission, this was not the ending I had hoped for,” she wrote. “While I am not proud of the financial outcome, I am proud of the impact we had on our customers’ lives.”

What’s Next for Proptech?

Divvy’s story is a stark reminder of the risks in the proptech space. While the acquisition is a win for Brookfield, it’s a sobering moment for startups and investors alike. As the industry continues to navigate turbulent waters, one thing is clear: not every unicorn gets a fairy-tale ending.

Want more fintech news? Sign up for TechCrunch Fintech here. Got a tip? Reach out to Mary Ann at maryann@techcrunch.com or on Signal at 408.204.3036.