Future City: Inside Opendoor’s IPO prospectus, an apartment startup that wants you to “swipe right”

Fifth Wall is raising $118M for European proptech

TRD NATIONAL /
Oct.October 12, 2020 08:00 AM

Opendoor’s open book

Since announcing plans to go public with a SPAC, Opendoor’s been offering potential investors a peek under the hood. Last week’s 650-page prospectus gave an unvarnished account of its financials, including nearly $1 billion in losses since 2013.

The filing also shined a light on the volatility of this year’s business: The company lost $118 million on nearly $2 billion of revenue during the first half of 2020. By comparison, it lost $158 million on $2.7 billion in revenue during the same period last year.

Opendoor’s deal with Chamath Palihapitiya’s blank-check company, Social Capital Hedosophia Holdings II, values the iBuyer at $4.8 billion and will give Opendoor $1 billion in new cash. Proceeds include $600 million through a PIPE, or private investment in public equity.

Here’s what else you need to know about the offering:

SoftBank’s stake. The firm invested $400 million in 2018 and will hold a 13.8 percent stake when the merger is complete. Other big owners are Khosla Ventures (8.7 percent) and AI Liquid RE LLC, an entity controlled by Len Blavatnik’s Access Industries (6.5 percent). Social Capital and seven of its directors will control a 5 percent stake.

Losses will continue. Opendoor expects losses and capital needs to go on “for the foreseeable future.” Since 2013, its total losses topped $909 million as of June 30, 2020.

Poor Eric Wu? Opendoor’s CEO earned a $275,000 base salary last year, lower than any other executive. But after the deal closes, he’ll hold 32.8 million shares for a 6.2 percent ownership stake.

Verified account. Adam Bain, ex-COO of Twitter and a director at Social Capital, will join the board. A nominating committee will identify other candidates.

Ready, set … grow. Opendoor currently operates in 21 markets, but has plans to expand to 100 major U.S. markets.

Covid redux. Thanks to the pandemic, Opendoor sold 7,832 homes during the first half of this year, compared to 8,985 during the same period last year. The company is currently in 21 markets, but plans to expand to 100 U.S. cities.

“There are almost no tours. There’s almost no proposals. The deal activity has totally dried up.”

Chris Roeder, head of JLL’s brokerage team in San Francisco, on office market decline 

You’ve got to spend money to make money?

Airbnb’s business has rebounded from peak Covid, but the hospitality startup burned through $1.2 billion in the year before its IPO, reported The Information.

Most of the heavy spending came during the first quarter, when the pandemic peaked and the company lost $1 billion in bookings overnight. Leaked company financials show revenue plunged 72 percent during the second quarter. All in, Airbnb spent $850 million during the first half of this year, including a $114 million restructuring fee. It took a $53 million impairment charge on startups that it previously invested in, including Lyric, Oyo and Zeus Living. Airbnb is planning to raise $3 billion in a December IPO that would value the company at $30 billion, Reuters reported.

 

Fifth Wall goes to Europe

Fifth Wall, the deep-pocketed VC firm that’s backed Opendoor, States Title and Industrious, is looking to raise an $118 million European proptech fund.

Investors so far include the real estate arm of BNP Paribas, the French bank; Pontos, a Finnish family office; MOMENI, a German real estate developer; and Azora, a Spanish investment manager. Fifth Wall, which launched in 2016, currently has $1 billion-plus under management. In July 2019, it closed a $503 million fund and has since closed a $100 million retail fund. It’s raising a $200 million carbon impact fund.

When it’s easy to be green …

A San Francisco startup that helps building owners go green landed $156.5 million from CBRE Group and others.

Founded in 2015, Redaptive Inc. targets big businesses and offers to help green-ify their offices by installing their own systems and equipment. The customers can eventually choose to buy the equipment. The round brings Redaptive’s total haul to $181 million. It was led by CarVal Investors LP with participation from CBRE, Engie New Ventures, Evergy Ventures and Linse Capital.


STAT OF THE WEEK

-5%

One-day drop in Palantir’s share price after stock market debut


VTS’ real-time data promise

Companies wrestling with return-to-work questions have a new tool courtesy of VTS: real-time data that captures fluctuating supply and demand. The New York startup said VTS Data replaces anecdotal information and dated market reports.

The data relies on VTS’ leasing management platform by using information shared by landlord and broker clients. (The data is anonymized.) VTS claims 12 billion square feet are managed with its software. It was valued at $1 billion after raising $90 million in May 2019.



Swipe right for your next apartment

Ripping a page from the world of dating apps, a new startup has developed swipe technology to help buyers and renters find their next home.

Casa Blanca, the brainchild of Hannah Bomze, launched 18 months ago in New York City. The company combines mobile search with agents to help prospects land their dream home. Using Casa Blanca’s app, prospective buyers and renters answer a questionnaire about their lifestyle and dream home. The company employs agents to facilitate deals; under its commission structure, buys get back up to 1 percent at closing. “From current house hunters to future buyers, the app is tailored to each person’s unique preferences,” Bomze told Fortune.

So far, Casa Blanca claims $100 million in sales to date, and is projecting $250 million in 2021. Backers include Samual Ben-Avraham, an early investor in WeWork, and apparel retailer Kith.


Small bytes

💸 Compass bought Modus, a title and escrow startup that previously raised $12.5M.

🏡 Orchard, a startup that wants to be the Carvana of real estate, debuted a dashboard to facilitate all-digital closings.

🧬 Blockchain startup Propy raised $1.2M+ from Tim Draper and others.

💰 SiteAware, an Israeli AI company that develops construction verification software, raised $10M Series A co-led by Axon Ventures and Robert Bosch Venture Capital.

🚀 Realtor.com launched an advertising partnership with Rocket Mortgage.

⚒ The mayor of London launched a housing design app, PRiSM, to help build and design manufactured homes post-Covid.

🏡 Two California homes owned by late Kleiner Perkins co-founder Frank Caufield are coming to market for $39.75 million and $19.5 million.

🔮 MoxiWorks launched a tool to predict homes-sale volume two months in advance.


 
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