Three days after making a landmark NFT sale, San Francisco-based startup Roofstock announced the layoff of a fourth of its staff due to market headwinds.
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“Like many, we have been closely monitoring the economic environment and are making appropriate adjustments to be responsive to current market conditions,” a Roofstock spokesperson told SFGATE, which broke the news Friday afternoon. “As a result, we made the difficult decision to let go of approximately 20 percent of our workforce.”
Roofstock declined to share how many employees it laid off; however, the company’s LinkedIn account notes it has between 500 and 1,000 employees — 517 of which have LinkedIn profiles. Roofstock also declined to share whether it will provide severance or continued health care benefits.
Founded in 2015, Roofstock is a fintech startup that allows investors to manage, sell and make fractional investments in single-family rental portfolios in 27 markets across the United States. In March, the startup reached unicorn status during a $240 million Series E equity financing round led by SoftBank Vision Fund 2, Khosla Ventures, Lightspeed Venture Partners, Bain Capital Ventures and several other high-profile firms.
With a $1.94 billion valuation in hand, Rooftsock CEO and co-founder Gary Beasley said his brainchild was poised for astronomical growth as the market continued its two-year winning streak.
“There has never been a time quite like this for single-family real estate, and Roofstock is truly at the vanguard of making the market work for everyone,” he said in a written statement in March. “We’re grateful for the continued support from our new and existing investors and stakeholders who share our vision to make this a modern, radically accessible asset class. I could not be more excited to welcome our partners from SoftBank to join us on this ambitious journey.”
Added SoftBank Investment Advisers Investment Director Serena Dayal, “Real estate is a huge asset class that has been relatively untouched by technology, and is often fragmented, analog and inefficient as a result. Roofstock makes buying and investing in rental homes seamless and accessible, and we saw a huge opportunity for the platform, particularly as interest in the sector continues to grow.”
However, the for-sale and rental real estate market began to experience turbulence shortly after Beasley’s bullish forecast. Rising mortgage rates, record inflation, crumbling affordability and a worsening global financial outlook began taking their toll on renters, buyers, sellers, real estate firms and investors, who’ve all pulled back.
The company’s main backer SoftBank announced in May a plan to cut investment activity in half due to increasing market volatility.
“It depends on our LTV levels and investment opportunities, and we strike balance, but I will say compared to last year, the number of new investments will be half or could be as small as a quarter,” SoftBank CEO Masayoshi Son said in TechCrunch.
Even with increasing headwinds, Roofstock seemed to be breezing through challenges as evidenced by the $175,000 NFT-enabled sale of a South Carolina single-family home through its web3 subsidiary, Roofstock onChain (ROC). The ownership of the NFT provides ownership to the physical home.
“Each home is titled in a limited liability company whose ownership is associated with a unique Home onChain, which is an NFT on the Ethereum blockchain,” the company explained in a written statement on Oct. 18. “Each Home onChain is transferred using smart contracts, which are deployed on the Ethereum network, and the entire transaction takes place transparently on the blockchain.”
The sale of the home was lauded as the first “one-click” home transaction — a dream of many real estate tech leaders.
“I never imagined I could buy and finance a house with a simple click, rather than going through the time-consuming and cumbersome traditional settlement and mortgage process. I’m grateful Roofstock paved the way for the rest of the market,” said the buyer of the SFR South Carolina property Adam Slipakoff in a press release.
Roofstock has yet to respond to Inman regarding specifics of the layoffs, with the company and impacted employees remaining quiet on social media, save for one agent relationship coordinator who spoke up on Monday.
“Last week myself, and many of my talented colleagues at Roofstock, learned that our positions were eliminated due to a business restructuring,” former employee Taylor Wagstaff wrote on LinkedIn Monday morning. “While my time there was cut short, I grew a lot professionally, met so many amazing people and was pushed out of my comfort zone.”
“With that being said, I am #opentowork and searching for my next opportunity!” she added.