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This week we’re looking at the story behind the sale of Divvy Homes, Ramp’s new product, some notable fundraising deals, and more!
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The big story
Last week, real estate fintech Divvy Homes announced that it was selling to Brookfield Properties for “a total consideration” of about $1 billion. At its height in 2021, the rent-to-own startup was valued at over $2 billion. On the surface, the outcome didn’t seem terrible, given the number of proptech companies that have shut down (most recently, EasyKnock) altogether in recent years.
However, digging deeper, we realized that the deal wasn’t really so rosy for many shareholders. Because Divvy had taken out so much debt, including a $735 million debt financing in October of 2021, most of that $1 billion was going toward paying that back as well as funding transaction costs and “liquidation preference to preferred shareholders.” CEO and co-founder Adena Hefets stated in a letter to stakeholders viewed by TechCrunch that “common shareholders nor holders of the Series FF preferred stock” would not receive any consideration. Ouch.
No doubt Divvy was hurt by interest rates surging in 2022, but it had other problems too. There were a variety of complaints alleging that the company was not maintaining its properties and/or was evicting people while also charging higher-than-market rate rents. Was it a fire sale or not? Guess that depends on who you ask. But even Hefets herself admitted she was “not proud of the financial outcome.”
Dollars and cents
Despite the recent turbulence in the space, some proptechs are still getting cash. Founded by a Better.com alum, Foyer — a platform that helps consumers save for down payments, essentially acting as a “401(k) for homeownership” — announced a $6.2 million seed round led by Alpaca VC and Hometeam Ventures.
Indian fintech Jar has turned cash-flow positive, an executive at the Tiger Global-backed startup confirmed on January 22. The 3-year-old startup, which offers savings and investment services to consumers, achieved the milestone while still growing by more than 10 times last year, according to an investor note seen by TechCrunch’s Manish Singh.
On January 22, Ramp announced a new treasury product that would give its customers a way to earn more on operating cash. I talked to CEO and co-founder Eric Glyman to get all the details. When I asked him if it was accurate to say Ramp was encroaching on digital bank territory with the new product, he acknowledged that was a “fair” assessment.
After pivoting from crypto to payroll, Rollfi is being acquired by Priority Tech Ventures, a unit of the publicly traded payments and banking tech provider Priority Technology Holdings, for an undisclosed amount.
Vertice, a London-based startup that operates an AI-powered SaaS spend platform, raised $50 million at a reported $500 million valuation. Ingrid Owen gives us the scoop.
Visa has joined African fintech Moniepoint as a new investor. Sources close to the deal told Tage Kene-Okafor that the fintech — which announced a $110 million investment last October — received over $10 million from Visa.
Austin-based Method, a platform that powers debt and debt-repayment features in fintech applications for companies such as SoFi, raised a $41.5 million Series B round led by Emergence Capital.
What else we’re writing
Fintech giant Stripe is laying off 300 people, according to a leaked memo reported on January 21 by Business Insider, but still plans to hire in 2025.
Indonesia’s antitrust agency KPPU fined Google 202.5 billion Rupiahs, equivalent to $12.6 million, on January 22 for an antitrust violation related to its payment system services for the Google Play Store.
There’s an interesting connection between Mistral, the French AI startup with a $6 billion valuation, and Alan, a health insurance unicorn. Romain Dillet gives us the details.
More startups shut down in 2024 than the year prior, according to multiple sources, and that’s not really a surprise considering the insane number of companies that were funded in 2020 and 2021. It appears we’re not nearly done, and 2025 could be another brutal year of startups shutting down. Read my deep dive, which includes data from Carta and AngelList.
High-interest headlines
Payroll platform Deel denies charges that it enabled money laundering, blames competitor for lawsuit
HSBC shuts payments app Zing a year after launch
Andreessen Horowitz closes UK office, pivots back to US crypto market
Clutch secures $65M Series B funding to propel credit unions into the fintech era
Thanks for reading! Until next week … follow me on X @bayareawriter for breaking fintech news, posts about coffee, and more.