#1OPEN DOOR Liquidity for Residential Real Estate Series A Financing 6823 SOLD#2TEAM Experienced team in data, technology and real estate. Eric Wu Head of Geo, Trulia CEO, Movity.com (YC 2010) Principle, Real Estate Fund Keith Rabois Partner, Khosla Ventures COO, Square Executive, LinkedIn/Paypal Ryan Johnson Portfolio Executive, Bain Capital PE Analyst, McKinsey Principal, Real Estate Fund JD Ross lan Wong Data Scientist, Square Growth Engineer, Prismatic Stats + EE, Stanford VP of Product, Addepar Software Engineer, Addepar CS, Washington University#3THE PROBLEM Residential real estate is one of the largest asset classes, yet one of the least liquid. Lengthy Average of 85 days on market Expensive Commissions of 6% X Bespoke Difficult to price This friction ties individuals to a location and a job, limiting geographic mobility.#4DAY 1 Find a Realtor Research online Receive bids Interview Decide TODAY Painful process spanning multiple months. DAY 10 Sale Ready Improvements Yard work Cleaning Photographs DAY 20 Advertise MLS, Zillow, Trulia Open houses Showings Maintenance DAY 80 Contract Offer Counter, Acceptance Inspection Financing period DAY 110+ Close Final walkthrough Offline signatures Title records Funding received Moving is often cited as one of the most stressful events in life.#55 million home sold annually MARKET SIZE S $260,000 median sales price w $72 billion in realtor commission ....... $5 trillion in total equity One of the largest markets with little innovation.#6OUR EXPERIENCE Simple, Certain & Fast O Click Automated, online sale process. Offer Instantly receive a cash offer. Cash Funding in as soon as 3 days. Friction-less liquidity for residential real estate.#7DO SELLERS WANT THIS?#8SELLERS CRAVE LIQUIDITY Asset Analogues Cars Equipment Electronics Homes Companies CarMax Used Car Dealerships Richie Brothers Iron Planet Gazelle Glyde WeBuyUglyHouses Discount 7.9%+ 15%+ 20%+ 35%+ In all assets, sellers demand and will pay for liquidity.#9OUR INITIAL DISCOUNT IS 15%.#10TRUE LIQUIDITY DISCOUNT OpenDoor Costs 15% Traditional Costs 9% = Liquidity Discount 6% • Seller's true liquidity discount is the delta between selling with a realtor vs. OpenDoor. • Sellers costs include 6% to a traditional realtor, 2% to operating costs, and 1% to closing costs. • Short-term, the average seller's liquidity discount will 6%.#1115% Revenue 1.7% Buy Closing Costs UNIT ECONOMICS 2% Operating Costs* 2.2% Financing Costs* 3% Buyer Broker Commission 1.0% In-House Sale Cost * Median home price is $260,000 * Financing costs are assumed to be 7-10% APR in the short-term. * Operating costs are assumed to be 2% in the short-term. 0.4% Sale Closing Costs 4.7% Margin#12ADDITIONAL SHORT-TERM UPSIDE 4.7% Current Margin 1.25% Improvement Multiple 2% Incentive Alignment 0.3% Title 8.25% Potential Margin#13WHAT ARE THE CORE RISKS?#14THREE CORE RISKS AVM Error Current AVMs have high variance and are error prone. Outliers During the validation stage, purchasing greatly overvalued homes is a costly mistake. Capital There are large initial capital requirements to purchase homes.#15MODEL IMPROVEMENTS Current AVMs 8-10% Median Error $1-5 per home No downside of inaccurate valuations. Must predict all cases, all homes. Incomplete data Inaccurate data More Targeted Target and purchase homes with low error. Owner-occupied Model sellers More Data Economics to collect more, accurate data. Seller inputs home condition, home characteristics, confirm data. Home quality and data Verified with. on-site inspection and custom BPO. Our AVM <4% Median Error $1,000's per home Complete Seller Data Complete Home Data We have better economics that allows us to gather more data for every home we value.#16Seller Data OUTLIERS Diligence Process and Key Adverse Selection Events Collect more data: We collect data about the seller and the home to inform our model. Home Offer Accepted Inspection/ Custom BPO Downside adverse selection: For a portion of homes, our AVM overvalues the home. Confirm Price We Accepted We Rejected Mitigation of downside: Inspections and custom BPOS identify the bulk of the homes that we overvalued, and confirm where the AVM was accurate and/or undervalued. Fund Cases we reject: We reject homes based on structural issues or poor home conditions not disclosed by seller. For every home we purchase, we ensure accuracy.#17CAPITAL FINANCING Secure expensive capital now to validate model. Then, prove track record for access to volume, inexpensive capital. 1 Validate Sources of Capital: • Local Banks ● High Net Wealth Individuals Target Rate: 8-10% $15-$25m 2 Growth Sources of Capital: ● Family Funds • PE Firms/Hedge Funds • Brokers Target Rate: 7-8% $100m+ 3 Scale Sources of Capital: • Banks Family Funds Target Rate: 5-6% $500m+ We have 3 term sheets for debt financing at our target terms.#18SERIES A FINANCING Key Objectives Build AVM Gather real-time MLS data, location data, seller inputs, and proprietary offline data to build an AVM. Acquire Sellers Acquire a large sampling (n=500) of real sellers looking to sell their home instantly online. Acquire and Sell Homes Acquire, rehab, maintain, and sell 50-150 homes in one geo. Milestones to Achieve < 8% Error Instantly, < 4% Error Post-Process We will be able to instantly price homes with less than 8% median error. Post-process (inspection), have less than 4% median error of the homes we purchase. Validate Seller Discount Curve Analyze both accepts and rejects to statistically validate conversion rates across various discounts and seller types. Validate Cost Structure Confirm the cost structure of acquiring, financing, maintaining, and selling properties. We're raising $9m in our Series A to execute on three key objection.#19Initiatives Goals Short-Term 201403 • Build AVM ● Acquire sellers Acquire and sell homes. Validate Model ● Validate Discount Curve • Validate Economics THE PLAN Medium-Term • Improve model accuracy • Reduce cost of capital • Increase operational efficiency • Expand to multiple markets ● 201603 • Decrease Discount ● Increase Homes/Geo Operate in Multiple Geos Long-Term 2018Q3 Launch capital marketplace - ie, LendingClub • Launch marketplace ● • Enter Adjacent Markets Operate at National Scale Optimize Profits Short-term goal is to validate model and break even. Long-term opportunity to maximize profit and enter adjacent markets.#20IMPACT The implications if we succeed. Geographic Mobility Home owners will be able to move more freely, spurring economic growth. Increase in Home Ownership Reducing all friction to sell makes home ownership more attractive.