School loan

Future City: Sonder’s Deep Cuts

Suit and sour

A former Better.com executive is suing her former employer, alleging the digital mortgage lender tricked investors into retaining support for its still-pending SPAC merger.

The lawsuit, brought by Sarah Pierce, ex-executive vice president of sales and operations, alleges management wrongfully expelled her for raising concerns about a profitability forecast executives gave to the board. and investors. The company, which lost more than $300 million last year, likely won’t be in the black until at least the second half of 2022 — not, as management claims, by the end of the first quarter. according to the complaint.

In a curious twist, the lawsuit also alleges that the company’s controversial CEO, Vishal Garg, told his colleagues that the long run of low interest rates – a boon to the company’s business – would continue because the chairman Biden would die of Covid-19.

The legal spat adds to the company’s already full list of problems. A beneficiary of the pandemic-era house price boom, Better.com’s business has been hit hard by rising rates in recent months, forcing at least three major rounds of layoffs. Garg’s reported callous handling of them generated its own PR conflagration.

Better, in a press release, vowed to “defend himself vigorously”. “We have reviewed the allegations in the complaint and firmly believe that they are without merit,” the company said.

Nasty, but lean

Speaking of layoffs, short-term rental startup Sonder cut a fifth of its staff, including chief technology officer Satyen Padella.

The layoffs, which affected 7% of its ‘frontline’ roles, are part of a restructuring aimed at cutting $85 million in annual expenses and helping the San Francisco-based company achieve free cash flow positive quarterly, without any additional funding, sometimes in 2023.

The now leaner company plans to grow its business by opening units already under contract while reducing new signings and “raising the bar” on its standards. Sonder is also slowing its planned geographic expansion.

The downsizing comes just five months after the company’s public debut via a SPAC merger, which valued it at $1.3 billion.

Sonder, whose stock has fallen more than 80% since its IPO, reported an estimated first-quarter loss of $83 million due to increased spending. It will incur between $3.5 and $5.5 million in one-time costs to complete the restructuring.


STATISTICS OF THE MONTH

Venture capital firms have invested $5.5 billion in equity in proptech in 2022, through May.


Down but not out

The ongoing tech rout has been brutal for real estate tech names.

Proptech shares have fallen an average of 30% this year through June 6, against a 23% decline in the Nasdaq Composite and a 14% decline in the S&P 500, according to investment bank Keefe, Bruyette & Woods.

Proptech SPACs have been hit even harder. The cohort is down 56% this year, and more than 60% of them are now trading below their purchase price of $10 per share.

The pace of SPAC’s IPOs and mergers meanwhile has slowed significantly from the boom of 2020 and 2021. This year has seen only one deal announcement: the Appreciate single-family rental market merger. with PropTech Investment Corporation II, real estate investors Joseph Beck and Thomas Hennessy’s second SPAC.

“Despite the slowdown, we continue to expect the public proptech landscape to grow,” KBW said.

The actual business of Proptech companies hasn’t been that bad. Public company revenue more than doubled year-over-year in the first quarter, led by iBuyers.

Fundraising is also up sharply this year, although it has slowed with recent macroeconomic volatility. Venture capital firms had injected $5.5 billion in equity funding into proptech companies through May – an 18% year-over-year gain – seed and start-up being the main beneficiaries.


“Despite the slowdown, we continue to expect the public proptech landscape to grow.”

Keefe, Bruyette & Woods

Who drives this thing?

Tomorrow’s forklifts will probably be driven by R2-D2.

Teleo, a Palo Alto-based startup that claims it can turn any construction and mining equipment into a semi-autonomous robot, has raised $12 million in a Series A round led by UP.Partners .

The company will use the funds to evolve and expand its so-called Teleo Supervised Autonomy technology, which allows a single operator to control multiple devices from a remote station. The company says its offering improves safety and helps address labor and low productivity issues. Its ultimate goal is complete autonomy.

Teleo has also recently teamed up with supplier RDO Equipment, one of the largest John Deere dealerships.

F-Prime Capital and K9 Ventures, among others, also participated in the Series A round.

small bytes

• Cove, a company that makes software that integrates building management and “tenant experience,” raised $10 million from Blackstone and others.

• Constrafor, a construction technology platform that streamlines billing and payment for contractors’ work, raised $6.3 million in equity and $100 million in debt financing.

• Pulley, a startup that wants to streamline building permits, raised $4.4 million in seed funding.

• Setpoint, a company that develops software to buy and sell “frictionless” homes, raised $615 million in debt capital and launched its platform.

• iBuyer’s mortgage brokerage subsidiary Opendoor has launched a new finance app allowing homebuyers to shop for loan options.

• Rhove received SEC approval for its application allowing tenants to make fractional investments in their own properties.

• Rezi, the online rental platform, launched in the Washington, DC metropolitan area.

• Seattle-based Sustainable Living Innovations, a technology company that designs “tech-enabled” buildings, has engaged Sharc International Systems, a Canadian company specializing in waste-water heat recovery, for six new construction projects.



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