Opendoor is laying off about 550 people, or 18% of the company, across all functions, its co-founder and CEO Eric Wu announced in a blog post today.
The real estate technology company is one of many real estate technology companies that had to lay off workers in 2022. Online mortgage lender Better.com saw several rounds of layoffs and in June, Redfin and Compass lay off more than 900 workers combined.
Skyrocketing mortgage interest rates and inflation are largely to blame for the drop in demand that has slowed business for these companies. For his part, Opendoor’s Wu said his company was navigating “one of the toughest real estate markets in 40 years.”
In his blog post, the executive said his company had worked over the past two quarters to reduce operating expenses. He wrote: “Prior to today, we reduced our capacity by more than 830 positions – primarily by reducing third-party resources – and we eliminated millions of fixed expenses. We didn’t make the decision to downsize the team lightly today, but we did so to ensure we can accomplish our mission for years to come.
Affected employees will receive ten weeks of severance pay, with two additional weeks of pay for each full year beyond two years of service. All current health care benefits will remain active for the remainder of the month, after which Opendoor will pay for three months of health insurance.
The company also plans to offer “career transition support” and launch an opt-in talent directory to help laid-off team members “connect with new opportunities.”
Opendoor went public in late December 2020 after completing its planned merger with SPAC Social Capital Hedosophia Holdings II, led by investor Chamath Palihapitiya. The eight-year-old company first offered its shares to the public at $31.47 per share. At the time of today’s writing, the shares were trading at $2.48, barely higher than the company’s 52-week low of $2.26. That means the company is valued at just $1.56 billion, down from a 2021 valuation of $8 billion.
As for venture capital, Opendoor last raised $300 million at a pre-money valuation of $3.5 billion in March 2019. Over time, it has raised around $1.3 billion. in equity and nearly $3 billion in debt financing to finance its real estate purchases. The company’s investors include General Atlantic, the SoftBank Vision Fund, NEA, Norwest Venture Partners, GV, GGV Capital, Access Technology Ventures, SV Angel, and Fifth Wall Ventures, among others.
Founders include Eric Wu and Keith Rabois, general partner of the Founders Fund.