Compass raises $400M from SoftBank, QIA; brokerage now valued at $4.4B

Series F values Compass at $4.4B

National /
Sep.September 27, 2018 08:02 AM

From left: Softbank’s Masayoshi Son and Compass’ Robert Reffkin and Ori Allon (Credit: Getty Images)

Compass is officially a $4.4 billion brokerage.

The New York-based firm said Thursday it closed another mega-round, raising a $400 million Series F led by SoftBank’s Vision Fund and Qatar Investment Authority. Wellington, IVP and Fidelity also participated in the deal, which gives Compass a total capital raise of nearly $1.2 billion, the company said.

Compass said the latest funding, first reported by Bloomberg, will enable it to accelerate plans to control 20 percent market share in 20 U.S. cities by 2020, and to double down on its technology. The firm, which was founded in 2012, also said it plans to expand internationally.

“Real estate is the largest asset class in the world,” founder Ori Allon said in a statement, “and we are excited to bring Compass technology to international markets.”

News of Compass’ latest funding comes less than a year after Softbank poured $450 million into the company in December 2017, at the time valuing the brokerage at $2.2 billion. That round closely followed a $100 million funding from investors including Fidelity Investments.

With nearly $1 billion in new money over the last year, Compass has been on an unabashed growth spree, scooping up agents and brokerage firms nationwide. (On Thursday, SoftBank also announced a $400 million investment in the iBuying platform Opendoor.)

“There’s nothing that will stand in the way of their growth now,” said Steve Murray of Real Trends, a Colorado-based research and data company that values brokerage companies. “With the capital behind them, they can grow as much as they want to. They really can.”

Over the past year, Compass said it has tripled its agent headcount to 7,000 nationwide. On Thursday, one brokerage head who has lost a substantial number of agents to Compass said the latest round was nothing short of terrifying. “This is going to be a killer for us,” the CEO said.

Last month, Compass told The Real Deal it is on track to hit $35.6 billion in sales volume this year, up from $14.8 billion in 2017. This summer, it picked up Pacific Union International, a $14 billion firm in San Francisco. Compass is also projecting $1 billion in 2018 revenue up from $370 million in 2017.

In addition to brokerage revenue, Compass is banking on new tech products, licensing and other money-making ventures to hit that target.

The firm plans to roll out title and escrow services, and this summer it announced its first tech licensing deal — though the partnership fell apart soon after. Some of the latest tools it has introduced to brokers include a CRM (customer relationship management) system and illuminated real estate signs that feature QR codes.

At $4.4 billion, Compass’ valuation blows other residential firms out of the water. Realogy — the New Jersey conglomerate that owns Coldwell Banker, the Corcoran Group and Sotheby’s International Realty — has a market cap of $2.5 billion. Its stock is down 25 percent since the start of the year, with a closing price of $20 per share on Wednesday.

Compass has stayed tight-lipped about its own plans to go public, but some speculated that the Series F would be the last one before an IPO.

 

Related Articles

arrow_forward_ios
Eric Gordon
Eric Gordon on the evolution of the residential data game — and how to stay competitive in the new world
Eric Gordon on the evolution of the residential data game — and how to stay competitive in the new world
Big Tech locations in NYC
MAP: Here’s a look at all the Big Tech locations in NYC
MAP: Here’s a look at all the Big Tech locations in NYC
What will proptech look like in 2019 and beyond?
What will proptech look like in 2019 and beyond?
What will proptech look like in 2019 and beyond?
Compass CEO Robert Reffkin (iStock, Getty/Illustration by Kevin Rebong for The Real Deal)
How much Compass paid to scale up
How much Compass paid to scale up
Compass CEO Robert Reffkin (Instagram, Compass, iStock/Photo illustration by Kevin Rebong for The Real Deal)
Inside Compass’ S-1: How it measures the upside of its tech
Inside Compass’ S-1: How it measures the upside of its tech
Houston House at 298 East 2nd Street and Matt Lee (Houston House, LinkedIn)
Developer Matt Lee to auction off East Village condo
Developer Matt Lee to auction off East Village condo
Robert Reffkin (Getty)
Compass lost $270M in 2020, revenue up 56% : IPO filing
Compass lost $270M in 2020, revenue up 56% : IPO filing
Michael Stern and Walker Tower unit 15B (JDS, Google Maps)
Michael Stern’s Walker Tower pad sells for 24% under ask
Michael Stern’s Walker Tower pad sells for 24% under ask
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...