The home-flipping startup Opendoor had little trouble raising money recently, announcing a $325 million round that valued it at more than $2 billion Wednesday. New investors include General Atlantic, Andreessen Horowitz, Invitation Homes and Travis Kalanick’s new 10100 Fund. The company says it will expand from its current 10 markets to 50 by 2020. The round was “wildly oversubscribed” and Softbank is still interested in investing in the company, I’m told by a person close to the company. While top-tier Silicon Valley investors help with more buzz for the company, big landlords like Invitation Homes will help on the partnership side. It plans to buy and sell $3 billion to $4 billion in homes this year, up from $1 billion last year.
The company’s ascension—marked by grabbing small percentages of home sales in suburban areas like Phoenix—has prodded other internet real estate businesses like Zillow and Redfin to get into the home-flipping game. Opendoor has a head start in volume of home sales but has seen falling margins on those sales in its biggest market, Phoenix, according to real estate tech analyst Mike DelPrete. (Opendoor disputes this, saying margins are up in Phoenix.) Opendoor has been building out new sides of the business to offer home buyers mortgages and title insurance to help increase the amount of revenue it can make on each transaction. The major risk for Opendoor remains the same: A market crash could leave the company holding a lot of houses it can’t sell.