Some people may have slowed down in 2020 amid a pandemic that has closed much of the world. Not Chamath Palihapitiya.
According to a new report in Bloomberg, Opendoor, the seven-year-old San Francisco-based company that, from its inception, aimed to help people buy and sell homes with the push of a button (or almost) is advanced conversations public through its merger with Social Capital Hedosophia Holdings Corp. II.
The outlet says the blank check company, which raised $ 360 million in April and is led by Palihapitiya, “is discussing raising new equity to fund the transaction with potential investors” and that the combined company is worth would have around $ 5 billion deal. It adds that the nothing has been completed and that the deal could still fall apart.
We asked both Opendoor CEO Eric Wu and Palihapitiya for comments. An Opendoor spokeswoman said the company had no comment. We don̵
Assuming the deal is quite advanced and at a valuation of $ 5 billion, one can see the appeal of Opendoor, which was most recently valued at $ 3.8 billion by private investors and like many other venture Backed outfits had an upside-down 2020.
In April, the company laid off 600 employees, or 35% of the then workforce, citing the “unforeseen effects on public health, the US economy and housing” caused by COVID-19.
However, in recent months, home sales across the country have been buoyant, driven by low mortgage rates and an increased appetite for more space, especially outside of crowded cities. US home sales rose an unprecedented 24.7% in July, up 8.7% from the same period last year, according to a report by the National Association of Realtors in late August. Also in June, home sales rose 20.7% (which was a record at the time).
Opendoor is also a brand that many retail investors already know and can easily understand. In fact, its consumer appeal is not that dissimilar to that of space tourism company Virgin Galactic, which eventually acquired Palihapitiya’s first blanket check company after raising $ 600 million in 2017. The combined outfit went public last October for $ 2.3 billion in market cap; Its market cap is now over $ 4 billion.
What Palihapitiya could do with a third special-purpose acquisition vehicle – it also raised $ 720 million this April – remains to be seen. The company has announced that it will use these IPO proceeds to purchase a company in the technology space, primarily outside of the United States.
Meanwhile, Palihapitiya is investing separately in Desktop Metal, a Burlington, Ma. Company, that is slated to go public through a separate SPAC. In particular, Desktop last week announced plans to go public on the New York Stock Exchange by partnering with Trine Acquisition Corp, a blank check company that raised $ 261 million last March. Palihapitiya helped lead a $ 275 million PIPE investment (for private investment in public equity) to fund the business.