Everyone wants to be a technology company. Office sharing, meat substitution, carpooling, styling, fitness, these are all technology companies, according to the founders who covet the high-level valuations that the appellation can garner in public markets.
But just having the technology doesn’t automatically make a higher investment. Consider the digital real estate turnaround: here is a company that is definitely ‘tech’, but where the value of technology is not yet clear. With iBuyer Offerpad’s merger with blank check firm Supernova Partners expected to close early this quarter, the value of the technology – or the lack of it – is something online real estate investors will want to consider when considering whether or not the technology is worth it. ‘they will place their bets in a crowded area.
The iBuyers Offerpad and its competitor Opendoor Technologies both describe themselves as technology companies. Opendoor says it is a “digital platform for residential real estate”. Offerpad says it is focusing on “technological real estate solutions”. Both companies have a chief technology officer and a version of a data scientist, likely there to refine technology investments and analyze their utility.
These companies can solve similar problems by seamlessly digitizing real estate transactions, but they seem to approach the problem in different ways: Opendoor with money and Offerpad with experience. During his presentation in March, Offerpad said he raised less than 9% of what SoftBank-powered Opendoor had, although he subsequently bought and sold 38% as many homes. And while Offerpad is run by a former real estate agent, Opendoor is run by someone from the real estate tech industry.
Opendoor’s deep pockets have undoubtedly fueled its rapid growth. It is now active in 39 markets with the stated goal of entering 42 by the end of the year, double the number of markets targeted by Offerpad this year, although it only has one. year less. But bigger doesn’t necessarily mean better: Opendoor lost a lot more money last year.