Future City: Inside Opendoor’s IPO prospectus, an apartment startup that wants you to “swipe right”

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Opendoor’s open book

Since announcing plans to go public with a SPAC, Opendoor’s been offering potential investors a peek under the hood. Last week’s 650-page prospectus gave an unvarnished account of its financials, including nearly $1 billion in losses since 2013.

The filing also shined a light on the volatility of this year’s business: The company lost $118 million on nearly $2 billion of revenue during the first half of 2020. By comparison, it lost $158 million on $2.7 billion in revenue during the same period last year.

Opendoor’s deal with Chamath Palihapitiya’s blank-check company, Social Capital Hedosophia Holdings II, values the iBuyer at $4.8 billion and will give Opendoor $1 billion in new cash. Proceeds include $600 million through a PIPE, or private investment in public equity.

Here’s what else you need to know about the offering:

SoftBank’s stake. The firm invested $400 million in 2018 and will hold a 13.8 percent stake when the merger is complete. Other big owners are Khosla Ventures (8.7 percent) and AI Liquid RE LLC, an entity controlled by Len Blavatnik’s Access Industries (6.5 percent). Social Capital and seven of its directors will control a 5 percent stake.

Losses will continue. Opendoor expects losses and capital needs to go on “for the foreseeable future.” Since 2013, its total losses topped $909 million as of June 30, 2020.

Poor Eric Wu? Opendoor’s CEO earned a $275,000 base salary last year, lower than any other executive. But after the deal closes, he’ll hold 32.8 million shares for a 6.2 percent ownership stake.

Verified account. Adam Bain, ex-COO of Twitter and a director at Social Capital, will join the board. A nominating committee will identify other candidates.

Ready, set … grow. Opendoor currently operates in 21 markets, but has plans to expand to 100 major U.S.