What’s Opendoor going to do with the $320 million they just raised?
Teke Wiggin from Inman News…
Property-exchange platform Opendoor just bagged what is probably the largest funding round ever for a real estate tech startup, with a reported valuation of at least $1 billion only two years after launch.
The startup is overhauling the traditional real estate business model in a fundamental way. It buys and sells homes itself, giving it unprecedented flexibility to improve speed, convenience and customer experience.
Opendoor’s deployment of $320 million in equity funding and $400 million in debt will send shockwaves across the industry, perhaps most by popularizing new technology and business practices.
I might be oversimplifying this but I think it’s pretty obvious why Opendoor raised that much money and what they are going to do with it.
The need to buy houses (inventory). So unlike most institutional money, a lot of the money raised will be tied to an asset. So I think getting a larger sum was a good risk.
To me Opendoor is more akin to CarMax. I recently sold on older car through CarMax, I didn’t get as much as I would have wanted but the process was pretty much hassle free, and to me, time is money.
The rub here is that some in Silicon Valley have thought real estate agents would be replaced by software by now, just like travel agents.
But many of these new entrants have failed to grasp the emotional nuance of buying and selling real estate.