Orcharda startup that offers cash to homebuyers so they can buy a new home before selling their old one is looking to raise about $75 million, according to people familiar with the matter.
Led by Chief Executive Officer Kurt Cunningham, Orchard is trying to raise funds through convertible notes that are expected to convert at less than $600 million or at a discount to the next round of common equity, said the people, who spoke on condition of anonymity because efforts to raise capital from ‘is private. The firm is working with a consultant to solicit interest from potential investors, they said.
Orchard spokeswoman Mandy Menaker declined to comment on “cost and structure or any aspect of discussions with investors.” As with all pending transactions, terms and structure are subject to change.
The company was valued at more than $1 billion in a funding round last year. Boston-based Accomplice led the round with participation from existing investors FirstMark, Revolution, First American and Juxtapose.
The startup’s second-quarter results were the strongest in its history, Menaker said, without giving specifics. Gross transaction volume — the value of homes bought and sold through Orchard — was approaching $1.5 billion for the year, Cunningham said last September.
As skyrocketing inflation and turmoil in public stocks weigh on private markets, cash-hungry startups like GoPuff have raised capital with convertible notes, in part because they delay the need to lock in a new valuation. Notes that have debt characteristics benefit investors by providing a margin of potential loss compared to traditional equity, which can be completely wiped out.
Cooling Home sales in the USA weighed on mortgage lenders, brokerages and other industry players. The slowdown has reduced the market value of companies including Zillow Group Inc. and Redfin Corp., and prompted others to cut workforces.
Rival garden Flyhomes has ceased operations about 200 employees, citing “uncertain economic conditions,” respectively to LinkedIn messages from affected employees. A representative of the company said that dismissals affected 20% of employees and declined to comment further.
