Instant-homebuying startup Opendoor may be jumping on the SPAC bandwagon.
The venture-backed company is in advanced talks to go public through a merger with Social Capital Hedosophia Holdings Corp. II, reported Bloomberg. The deal would value Opendoor at $5 billion, and is set to be announced in the next few weeks.
Founded in 2013, Opendoor buys homes online for cash and aims to sell them for a profit after making modest repairs. The San Francisco-based company, led by CEO Eric Wu, competes with Zillow, Redfin and Offerpad in the fast-growing but somewhat unproven space.
iBuyers’ market share more than doubled in 2019, according to industry analyst Mike Del Prete. About $8.7 billion worth of homes were purchased by iBuyers in 2019.
To date, Opendoor has raised $1.3 billion from investors, including SoftBank, General Atlantic, Khosla Ventures, NEA and Norwest Venture Partners. It was most recently valued at $3.8 billion after raising $300 million in March 2019.
Along with other iBuyers, Opendoor suspended home-buying during the pandemic and in April was forced to lay off 35 percent of its staff. The company resumed buying homes in May.
Social Capital II is a partnership between venture capitalist Palihapitiya and investor Ian Osborne. Last year, their first blank-check company merged with Richard Branson’s Virgin Galactic.
Blank-check companies have made a comeback this year as a hedge against the volatile market.
Porch.com, a home-services startup, plans to go public in a $523 million deal with a SPAC, or special-purpose acquisition company. Airbnb had preliminary talks with Bill Ackman’s $4 billion SPAC before filing confidentially for an IPO. “I wouldn’t use the word rebuff,” the billionaire investor later told Bloomberg TV. [Bloomberg] — E.B. Solomont