Opendoor, a San Francisco online marketplace that buys and sells homes, has raised a whopping $325 million to expand to new markets as it takes on new challengers Zillow and Redfin.
Opendoor has now raised $645 million in equity and $1.5 billion in debt financing to buy and sell homes online. Leading the round were homebuilding company Lennar, General Atlantic and Access Technology Ventures. New investors Andreessen Horowitz, Coatue Management, 10100 Fund and Invitation Homes also participated, as well as existing investors Norwest Venture Partners, Lakestar, GGV Capital, NEA and Khosla Ventures.
The company will use the massive cash infusion to expand from 10 markets today to 50 by the end of 2020 and enhance its technology platform. Opendoor needs to raise a lot of cash because it’s not cheap to buy homes en masse. Today Opendoor purchases more than $2.5 billion in homes on an annual run rate.
Opendoor launched in 2014, building a tech platform that uses algorithms to give home-sellers a quick offer. The 650-person company then resells the houses online.
Opendoor, along with Offerpad, was one of the pioneers of the so-called iBuyer movement — a group of companies that use technology to rapidly value and make offers on homes and then sell them quickly. That market has gotten a lot more competitive in recent years as Seattle real estate heavyweights Zillow and Redfin have thrown their hats into the ring.
Redfin jumped into direct homebuying and selling last year through its Redfin Now program, and recently upped the amount of home value it is willing to carry on the books. Zillow is just getting started with homebuying and selling through the expansion of its Instant Offers program, but its CEO Spencer Rascoff is bullish on the business, saying it could produce $1 billion a year in profits.