All About Divvy Seriesann Azevedotechcrunch

Divvy Seriesann Azevedotechcrunch: Divvy, which buys and rents homes while setting aside ~25% of monthly payments toward the renter’s future down payment on the house, raises $110M Series C. The home rental startup raised $86M in a 2014 Series B round led by Andreessen Horowitz and joined by Thrive Capital and Lerer Hippeau Ventures. Divvy provides landlords with a service that’s similar to Airbnb but with all of the revenues going to them instead of the hosts/guests. The startup seems to be positioned as a cheaper Airbnb alternative for landlords.

Divvy’s model is unique in that it enlists contractors with their own crews to fix up properties and manage maintenance, avoiding the higher costs associated with hiring full-time employees. The company plans to buy up to 20,000 homes across the US over the next decade (they currently have about 1000 under management), and the aim is to serve low-income renters while also earning a profit for investors.

The startup is targeting an underserved market that includes families earning under $50,000 per year. They are competing with other home rental startups like Havenly, Handybook, and Casper. The company’s average customer spends $1300 on rent each month.

Divvy’s expansion plans will also include opening a “construction academy,” which will provide training to low-income individuals looking to gain skills in the construction field. Plans are to provide a curriculum that will help participants graduate ready to work for Divvy (or similar companies).

Divvy is backed by Colony Capital, the investment firm that specializes in distressed real estate. The company’s COO and Co-Founder, Martin Erskine, was previously a senior vice president at Colony. Erskine built and ran Colony’s special servicer engineering group before leading the acquisition of Tom Barrack’s OneWest Bank, where he served as President.

Divvy was founded by home renovation startup veterans Lewis Ranieri and Brian Scudamore (Scud). Ranieri created the mortgage-backed securities market in the 1980s that led to the savings and loan crisis. He set up a special servicer that bought up thousands of bad mortgages from failed banks following the financial crisis.

Scudamore is also an experienced entrepreneur with a background in real estate and home services. He previously founded Planet Home Services and was the CEO of the in-home tech startup Moovit. Scudamore also has business development experience and a background in marketing. He is the founding partner of NAP Ventures and manages his family’s investments through the company, Erskine Capital Management Group.

The company is based in Chicago and recently moved into new headquarters at 1001 W Randolph St.

Separately, the company announced that they have started operations in Toronto, London and Mexico City.

In March 2017, Divvy acquired a majority stake in RealCoast, an easy-to-use app for renting apartments for short (and long) stays. The partnership gives renters access to 10,000 properties across 4 countries. The joint venture was announced in October 2015 and both companies are based in Chicago. Divvy’s Erskine said the company plans to start purchasing properties in Mexico, Canada and the UK in 2017.