High-profile proptech startups Divvy Homes and EasyKnock are being gracefully acquired and shutdown respectively – proving that not all legacy industries are so easily transitioned to direct to consumer business models. Not dissimilar to other wobbling contemporaries like Carvana, the models struggled to gain footing under the backdrop of a challenging interest rate environment and a slowdown in real estate fintech funding.

The reality is D2C is hard to master (even with nearly-unlimited funding), and customer acquisition cost for new entrants trying to reshape an old industry was an afterthought to efficiency when acquiring market share was a zero sum game.

Despite raising over $700 million in funding and achieving a $2.3 billion valuation in 2021, Divvy Homes was unable to sustain its business model due to rising interest rates that limited its ability to purchase homes. The rent-to-own model business is being acquired by a division of Brookfield Properties real estate development company.

Similarly, EasyKnock, a startup offering tech-enabled residential sale-leaseback services, abruptly shut down last month following several lawsuits and an FTC consumer alert concerning its controversial business practices. The company faced allegations of deceptive practices, including purchasing homes from financially stressed homeowners at low prices and charging high rents. With the fintech sector continuing to face high rates and limited funding, more flux is likely.