Proptech startup Stoa, renowned for its innovative iBuyer software platform, has been forced to take drastic measures by slashing its workforce by 80%, reducing the number of employees from around 100 to just 20.
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The company's recent fundraising efforts of $300 million, through a combination of equity and debt, failed to shield it from the impact of rising inflation rates and an economic crisis that significantly altered the U.S. real estate market. Now, Stoa faces an uncertain future as it grapples with a reorganization and evaluates potential deals.
The significant reduction in Stoa's workforce is a consequence of the challenging real estate market conditions in the United States, where the company operates. Despite having raised $300 million since its inception in 2017, with $100 million in equity and $200 million in debt, the startup faced difficulties in sustaining its operations amid the changing economic landscape. Most of the funds were secured within a remarkably short period, spanning from November 2021 to August 2022, indicating initial confidence in Stoa's potential.
In light of these developments, Stoa recently received an undisclosed investment, offering a glimmer of hope amidst uncertainty. The company disclosed that it has multiple options on the table, suggesting that it is exploring various avenues to navigate the challenging market conditions and secure its future.
Stoa's primary offering, the iBuyer software platform known as FlipOS, revolutionized real estate investment by enabling investors to purchase, renovate, and sell homes more efficiently. By providing low-rate lending and a guaranteed post-renovation purchase offer with a five-day close, the platform attracted interest from investors seeking streamlined processes and enhanced returns.
The startup's founding team, led by Or Agassi as CEO and co-founded by Tom Sella and Jonathan Saragossi, faced challenges as they navigated through a turbulent market. Jonathan Saragossi has since departed from the company, leaving Agassi and Sella to steer Stoa through these troubled waters.
Among Stoa's main investors, Oren Zeev played a pivotal role in supporting the company's growth. Additionally, BRM and Fintech Acquisition Corp. (FTAC) also contributed as investors, indicating the promising potential the company exhibited in its earlier stages.