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Rent-to-own innovator Divvy raises $30 million to fund growth

Divvy officially launched earlier this year with $7 million in funding. Caffeinated Capital and DFJ previously invested in the company. Divvy’s business model is different than traditional rent-to-own operators, some of which have been accused of predatory practices by purchasing run-down properties and convincing tenants to rent the properties by offering them the chance to buy the house in the future despite not making any repairs or improvements. The buyer typically puts 2% down on the home, then pays a monthly amount to Divvy that includes both rental and equity payments. During that time, they can also pay down debts and demonstrate enough steady income to be mortgage-ready when that three-year period ends. Divvy will also offer residents the chance to buy the home at any point during those three years should they find themselves ready to do so earlier than anticipated. According to the company, it is receiving 2,000 applications each month and buying one home per day in its current markets. And now, the company has new funding to grow its business. As part of the funding, a16z’s Alex Rampell, who leads the firm’s fintech investments, will be joining Divvy’s board. “We envision a world where everyone has a stake in the prosperity of their neighborhood and are excited to make Divvy the preferred partner for renters looking to purchase their first home,” Ma added.