Lennar Ventures, the corporate venturing arm of home builder Lennar, co-led a $34m series B round for US-based real estate financing service Divvy Homes with Singaporean sovereign wealth fund GIC yesterday.
Venture capital firms Andreessen Horowitz and Caffeinated Capital also contributed to the round, as did individual investor Max Levchin.
Divvy, set up by Levchin’s HVF Labs startup studio, purchases a chosen home on behalf of its tenant and puts approximately 25% of their monthly rent towards a future down payment for a traditional mortgage on the property.
The company works with tenants to identify suitable properties and negotiates the sales process, taking a 2% upfront payment and covering all fees, closing costs, taxes and insurance. The payment plan typically enables tenants to apply for a mortgage within three years.
Tenants can walk away from a home if their circumstances change and will be given back the savings they have accrued. Divvy is currently active in the cities of Atlanta, Cleveland and Memphis, and will explore additional markets in the future.
The series B funding will enable Divvy to grow its team of estate agents, bolster technology investment and purchase more homes to accelerate its growth.
Eric Feder, managing general partner for Lennar Ventures, said: “Divvy’s mission to make homeownership more accessible really resonates with us. By investing in Divvy, we are accelerating our shared vision of giving more people access to their dream home.”
Andreessen Horowitz led the company’s $30m series A round, which consisted of an undisclosed ratio of equity and debt financing, in October 2018. The round also featured Caffeinated Capital, DFJ and Levchin, the three having already provided $7m of seed capital for Divvy in January 2018.
