Japan's SoftBank is reportedly investing $400 million in Opendoor, an online real estate selling platform revolutionizing the buy and sell industry with its use of smart algorithm instead of hiring third-party sales agents.
If the deal is confirmed, this is the latest among the series of aggressive investments made by SoftBank's $100 billion Vission Fund announced in 2017. The company is aiming to hold stakes in technology startups of which platform are heavily reliant on artificial intelligence.
SoftBank $100 billion Vision Fund is a major stakeholder in Uber Technologies. The Japanese company has also acquired the U.S.-based robotics company Boston Dynamics and invested in British semiconductor designer ARM Holdings PLC.
The investment will also push Opendoor to a market valuation of more than $2 billion according to a source who spoke with Bloomberg anonymously. The startup has already raised over $1 billion in equity and another $2 billion in debt from General Atlantic LLC, Access technology Ventures, and homebuilder Lennar Corporation according to Bloomberg.
Opendoor boasts of a platform where owners could sell their homes by uploading basic information on the website. The algorithm will asses this information and Opendoor will directly make a cash offer for the property within 24 hours. Essentially, Opendoor serves as the initial buyer that would look for its own subsequent purchaser who could also use the website to make the acquisition. Buyers could easily scout hundreds of properties by browsing the website or using the Opendoor app.
The platform eliminates finding property agents and the process of negotiations which could all take several months to finish. Opendoor also skips the process where sellers would have to bring potential buyers to see the actual place only to know that they would not be buying it later into the negotiations.
Opendoor was established in 2014 with the goal of making the buy and sell process "radically simple." Since then, the startup has served nearly 20,000 customers and now operates in fourteen cities in the United States.
A few startups have since attempted to replicate Opendoor's success by offering similar platform. Among these startups were Perch, Offerpad, Zillow Group Inc., and Redfin Corp. Realogy Holdings Corp. has recently announced a similar strategy where it offers cash to home sellers.
If the $400 million investment pushed through, Opendoor will use the money to diversify its operations into more regions in the country. The startup may soon offer home loans and other real estate services according to Eric Wu, the Opendoor founder.
