Rent-to-own startup Divvy Homes issued pink slips to 94 U.S. employees based in the company’s San Francisco, California headquarters as well as remote staff across the country.
This is the third round of layoffs Divvy Homes had in 12 months as rising interest rates have made it challenging for the proptech startup that offers a path to homeownership via a rent-to-own program.
“The terminations will be in effect as of November 7, 2023, although Divvy reserves the right to extend separation dates in its discretion. This planned action is anticipated to be permanent with no bumping rights; Divvy does not have unionized employees,” according to a letter sent to Oregon’s Office of Workforce Investments on September 7 from Rachel Ergmann, Divvy Homes’ head of talent.
Divvy’s layoffs were first reported by Inman News and TechCrunch.
“I am sad to announce that alongside many other talented individuals, my Account Executive role was impacted in Divvy Homes third round of layoffs, meaning I am now #opentowork!,” an account executive posted on LinkedIn.
“As with many others, my employment has been impacted by the recent layoffs at Divvy Homes (…) To all my former colleagues and teammates, it was an incredible journey over the last year and half with you guys! I have had the pleasure of working with some of the most capable, intelligent and compassionate people at Divvy. I have had the opportunity to learn, collaborate, and take ownership over projects and contribute to a meaningful mission of making home ownership more attainable,” said a full stack software engineer on a LinkedIn post.
Affected positions included senior software engineers, senior managers and vice presidents of capital markets, sales and compliance in 20 states – such as Arizona, California, Colorado, Delaware and Florida, according to the letter sent to Oregon’s Office of Workforce Investments.
The firm didn’t respond to requests for comment or the total number of employees left at the company.
Divvy Homes conducted an unknown number of layoffs in February and laid about 40 employees or 12% of its staff in September 2022. The company cited worsening economic conditions as the driving force for the second round of layoffs.
Founded in 2017, the proptech purchases a home for a potential buyer and then rents it back to them for up to three years. Up to 25% of each subsequent monthly payment goes toward saving for a downpayment in which a customer builds up to 10% of the home’s value during the three-year lease period, according to the firm.
Fast Company reported in October 2022 that Divvy Homes charged higher rents than other landlords in some of its 19 markets, citing court cases and interviews with renters. The Silicon Valley firm was slow and reticent to make repairs and had increased evictions, according to renters. Divvy said the eviction rate was in line with the national average.
Divvy’s last known funding occurred in August 2021 – a $200 million Series D funding led by Tiger Global Management and Caffeinated Capital, which nearly quadrupled its valuation to $2 billion valuation at the time.
The firm’s last known valuation was $2.3 billion in 2021, according to PitchBook.
