Online real estate company Opendoor said on Wednesday it has raised $325 million in new financing, the latest so-called mega-round in venture capital as investors eagerly deploy their record-size funds.
The new funding puts San Francisco-based Opendoor’s valuation at more than $2 billion, according to a source familiar with the matter. The round was led by investors General Atlantic and Access Technology Ventures, as well as home construction company Lennar Corp. Investors Andreessen Horowitz, NEA and Norwest Venture Partners, among others, joined the round.
Opendoor bids on homes, buys them and then sells them, charging a fee of about 6.7 percent to 13 percent. The company says it eliminates steps such as finding a real estate agent and hosting open houses, and homeowners are not stuck waiting to sell their house before they can move or forced to juggle two house payments.
Founded in 2014, Opendoor has yet to be tested by a housing market crash.
The company is on pace to spend more than $2.5 billion on home purchases over the next year, with the average price of a home at $250,000. The company declined to provide its revenue from selling homes.
More startups like Opendoor are raising mega-rounds, the term for funding rounds of $100 million or more, as venture capital firms raise larger funds and write larger checks to compete with investors like SoftBank Group Corp, which has a war chest of billions of dollars. In the first quarter this year, U.S.-based startups raised 34 mega-rounds, almost double the number raised in the same time period a year ago, according to data firm CB Insights.
Opendoor investor NEA last year raised its largest fund ever, $3.3 billion, and Norwest Venture Partners this year closed a $1.5 billion fund, its largest to date.
The round brings Opendoor’s total fundraising to $645 million, and the company has also raised about $1.5 billion in debt. It plans to expand to 50 markets from the 10 markets it operates in today.