Some shareholders of a16z-backed Divvy Homes may not see a dime from $1B sale

The $1 billion acquisition of rent-to-own startup Divvy Homes, which was announced Wednesday, is expected to leave some shareholders without a payout, according to sources familiar with the deal. 

The terms — and Divvy’s journey from buzzy startup to acquisition target — reflects the rollercoaster ride the proptech industry has endured over the past decade.

The San Francisco-based startup, founded in 2016, had raised more than $700 million in debt and equity from well-known investors such as Tiger Global Management, GGV Capital, and Andreessen Horowitz (a16z), among others. By 2021, the company was valued at $2.3 billion.

And while the Brookfield Properties purchase of Divvy for $1 billion was at half of its peak valuation, the acquisition could still be considered a win in an industry that has had a string of shutdowns and bankruptcies. 

However, it’s a loss for some shareholders, according to a letter from Divvy CEO and co-founder Adena Hefets, which was viewed by TechCrunch. 

“If the transaction closes, Divvy will sell substantially all of its assets, namely its home portfolio and brand, to Brookfield for approximately $1 billion. However, after repaying its outstanding indebtedness, transaction costs, and liquidation preference to preferred shareholders, we unfortunately estimate that neither common shareholders nor holders of the Series FF preferred stock will receive any consideration,” according to the letter, which was sent to shareholders, former employees, and “Divvy supporters.”

FF preferred stock, also known as Founders Preferred Stock, is a type of stock that is issued to founders of a company. The law firm Cooley defines the shares as being issued to founders “at the time of incorporation in order to facilitate sales of stock by founders in connection with future equity financings.”  

TechCrunch has reached out to Hefets and Divvy Homes for comment and will update the article with any response.

Another source told TechCrunch that equity holders “got zero’d” so “founders, employees and VCs” will get “nothing” from the sale. The identity of the source, who asked to remain anonymous, has been verified by TechCrunch.

Divvy operated a rent-to-own model in which it worked with renters who wanted to become homeowners by buying the home they wanted and renting it back to them for three years while they built “the savings needed to own it themselves,” it said.

The company ran into some hiccups when mortgage interest rates began to surge in 2022, leading it to conduct three known rounds of layoffs in a year’s time. Divvy’s last known funding occurred in August 2021 — a $200 million Series D funding led by Tiger Global Management and Caffeinated Capital. The Series D round was announced just six months after a $110 million Series C. 

Hefets also shared in the letter the “decision to sell wasn’t easy” and “came after a thorough review of Divvy’s strategic alternatives … and with significant deliberation around our options.” 

She said the move followed “years of fighting difficult market conditions, including rising interest rates, and making as many cost cuts as possible.”

As the company looked into what lay ahead in 2025, it decided the best way forward was to sell its “portfolio of homes now and return as much capital as possible to shareholders.”

“With almost a decade of pouring myself into this company, and believing in this mission, this was not the ending I had hoped for…While I am not proud of the financial outcome, I am proud of the impact we had on our customers’ lives,” Hefets added.

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