Investors place another huge bet on a start-up that is trying to reinvent a decades-old process into something close, this time by paying $ 325 million to Opendoor – a company that wants to lead # 39; complex operation of buying or selling a home to something as simple as calling a Lyft.
The idea of Opendoor is not so dissimilar to a consumer theory that has flourished in companies worth tens of billions of dollars – consumers hate the complex processes and are willing to pass these processes to technology companies if they can do it more simply. Buying and selling at home can be one of the most intense, requiring a lot of moving parts and coordinating multiple schedules and schedules. Opendoor's theory is that it can create an important business by zeroing the time and cost of energy and creating a new technology-based business model, like Uber or Airbnb.
Opendoor says he hopes to expand to 50 markets by the end of 2020 with this additional funding. He is currently in ten markets, and he also claims that he is now buying more than $ 2.5 billion in housing according to an annual operating rate. The company says it has raised $ 325 million in financing, co-led by General Atlantic, Access Technology Ventures and Lennar Corporation. Andreessen Horowitz, Coatue Management, Fund 10100 and Invitation Homes also participated, as well as existing investors Norwest Venture Partners, Lakestar, GGV Capital, NEA and Khosla Ventures. Opendoor raised a total of $ 645 million in equity and $ 1.5 billion in debt.
"What I've realized is that there's a lot of headwind with people wanting to make transactions with their mobile device," said CEO Eric Wu. "We see this with Uber and Lyft and Amazon.I think the future of real estate will be on demand, it's the centerpiece of the Opendoor thesis." How can we Doing the transaction in real time and instantly .I realized that there was going to be tailwinds, and that the real estate was in dire need of being transformed. "
Opendoor has also sought to expand its efforts to make viewing these homes equally seamless. The company allows potential customers to check a house by opening it with the application seven days a week. Wu said that most potential buyers go home every seven days until the transaction, and then seven days after the transaction occurs. Since this is such an important step for any homeowner, it makes sense that a lot of planning and consideration go into the process. The next step is to create some sort of trading system, where Opendoor is working to create a simplified way to go around an existing home for a new home.
Still, buying (or selling) a home is one of the most important transactions that a consumer can do, especially if it's in a home. a large metropolitan area where homes can quickly reach the range of $ 1 million and up. So it's always hard to convince consumers that they should press a few buttons to make a transaction worth hundreds of thousands of dollars. Wu said the challenge was to build enough trust with customers that they realize the process should be as transparent and transparent as data.
"It's something we've had to face right from the start of the service," Wu said. "We were asking sellers to sell their home to a technology company online. have made – like cost reduction and price transparency – have helped us to build trust.It is one of the most important financial transactions that we can do.We need to establish a world-class pricing model, be transparent about how we get the quote, make it a cheap service, and it helps to provide some security around the process.
In an attempt to do all this, Mr. Opendoor says that he has built a robust data set that will help better model potential prices for homes and be more transparent about this information. Wu said Opendoor currently employs around 650 people and hopes to double that figure by the end of next year, and the company is investing a significant portion of its capital in the development of its science team data. The challenge is to understand the dynamics of the housing market – and any potential chaos – to better assess how to buy and sell these homes. Opendoor acquires some risk by buying houses and keeping them for a period of time, so making sure that the company knows the market's performance will be one of its biggest challenges.
Opendoor is certainly not the only player in this field because some competitors like Knock and OfferPad are starting to raise additional capital. Knock picked up $ 32 million in January last year with a similar gamble: simplifying the home buying process and managing all the details behind the scenes. It has been shown that the venturemen community (especially the growing numbers) has an appetite for models that seek to satisfy the same consumer demand by simplifying overly complex processes with just a few app entries. intelligent powered by data science.