Everybody wants to be a tech company. Shared office, meat substitution, transportation, fashion styling, fitness – all are tech businesses, according to the founders who covet the valuable valuations the appellation can earn in public markets.
But just having technology doesn’t automatically make an investment higher. Consider the real estate digital home swap: here’s a business that’s undoubtedly “tech,” but where the value of technology is still unclear. With iBuyer Offerpad merging with blank check firm Supernova Partners expected to close early this quarter, the value of the technology – or lack thereof – is something that online real estate investors will want to consider when placing your bets in a crowded field.
So-called “pure gaming” iBuyers Offerpads and their competitor Opendoor Technologies describe themselves as technology companies. Opendoor says it is a “digital platform for residential real estate.” Offerpad says it focuses on “technology-enabled real estate solutions.” Both companies have a chief technology officer and some version of a data scientist, presumably there to hone technology investments and analyze their usefulness.
These companies may be solving similar problems by seamlessly digitizing real estate transactions, but they seem to be tackling the problem in different ways: Opendoor with money and Offerpad with experience. As of its March filing, Offerpad said it had raised less than 9% of what Opendoor had powered by SoftBank, though it had subsequently bought and sold 38% of as many homes. And while Offerpad is run by a former real estate agent, Opendoor is run by someone in the real estate tech business.
Opendoor’s deep pockets have undoubtedly fueled its rapid growth. It is now active in 39 markets with a stated goal of entering 42 by year-end, double the number of markets Offerpad is targeting this year, despite being only one year younger. But bigger doesn’t necessarily mean better: Opendoor lost a lot more money last year.