Compass’ IPO means payday for these investors

SoftBank, Wellington and industry figures have invested $1.5B since 2012

National /
Jan.January 13, 2021 07:00 AM
From left: American Express CEO Kenneth Chenault, Joshua Kushner, Richard LeFrak, Softbank CEO Masayoshi Son, Miki Naftali and Salesforce CEO Marc Benioff (Getty)

From left: American Express CEO Kenneth Chenault, Joshua Kushner, Richard LeFrak, Softbank CEO Masayoshi Son, Miki Naftali and Salesforce CEO Marc Benioff (Getty)

 

Compass investors could be in line for a windfall when the residential brokerage goes public later this year.

Since its launch in 2012, Compass has raised more than $1.5 billion from investors, who collectively hold a 60.25 percent stake in the startup, according to data from Pitchbook.

That group includes late-stage backers SoftBank Group, Wellington Management and Dragoneer. It also includes Joshua Kushner’s Thrive Capital, Salesforce CEO Marc Benioff and American Express CEO Kenneth Chenault, who invested in Compass’ early funding rounds, along with industry players Miki Naftali and LeFrak.

Led by CEO Robert Reffkin and Chairman Ori Allon, Compass filed confidentially to go public this week. For months, it had been laying the groundwork for the offering by bolstering its executive team and board, and adding title and escrow services to its offerings.

As with any startup, the earliest backers could reap the biggest rewards. Here’s who invested in Compass and when.

Seed funding round: $8M
Share price: Unknown
Share of company: Unknown

The brokerage — then known as Urban Compass — raised an $8 million seed round in 2012. At the time, it was focused on New York City rentals and agents were hired as “neighborhood specialists” to show apartments. Investors included Goldman Sachs, where Reffkin previously worked, as well as Founders Fund, Joshua Kushner’s Thrive Capital, American Express CEO Kenneth Chenault, .406 Ventures and others.

Series A: $20M
Share price: $10
Share of company: 13.21%

In September 2013, the startup raised $20 million at a post-money valuation of $133.24 million.
Compass intended to use the funds to hire more salaried rental agents, but in early 2014 it pivoted to a more traditional commission model. Investors included Advance Publications (the parent company of Condé Nast), and Marc Benioff, founder and CEO of Salesforce. Corigin Ventures (now Alpaca) and Prudence Holdings joined the round, with prior investors Founders Fund, Thrive and .406 Ventures.

Series B: $42M
Share price: $20.77
Share of company: 4.37%

Compass’ next chunk of capital — $42 million in July 2014 — more than doubled its valuation to $362 million. It also gave it the war chest to expand to cities such as Boston, Chicago and Washington, D.C. Advance Publications, Benioff and Chenault invested again, as did Thrive, Founders Fund, and .406 Ventures.

Series C: $50M
Share price: $40.50
Share of company: 3.27%

IVP, a late-stage venture firm that bet on Twitter, Snapchat and Dropbox, led Compass’ $50 million Series C in September 2015, which valued it at $810 million. New investors included Sinai Ventures, developer Miki Naftali and LeFrak. Thrive, Benioff, Chenault, Founders Fund, Advance, and .406 Ventures again re-upped their investments to help Compass keep growing nationwide and to bulk up engineering, product and design teams.

Series D: $75M
Share price: $42.63
Share of company: 6.1%

Compass gained unicorn status in August 2016 after closing a $75 million round led by Wellington Management. Wellington’s track record of betting on late-stage companies and taking them public fueled speculation that Compass was eyeing a public offering. Investors IVP, Thrive and Founders Fund also participated, giving Compass the firepower to further expand its geographic reach. It soon entered San Francisco, where it eventually scooped up several top firms.

Series E: $550M
Share price: $65.88
Share of company: 19.39%

In November 2017, Compass nabbed $100 million from Fidelity, IVP and Wellington to help build a customer relationship manager, or CRM. A month later, SoftBank wrote a mega-check for $450 million in what was, at the time, the biggest-ever investment in a real estate brokerage. The SoftBank investment boosted Compass’ valuation to $2.2 billion, up from $1.8 billion just weeks earlier, and helped to bankroll a series of brokerage acquisitions across the country. Compass bought CRM Contactually in February 2019.

Series F: $400M
Share price: $118.57
Share of company: 8.12%

SoftBank doubled down on its investment in September 2018, co-leading a $400 million raise with Qatar Investment Authority that brought Compass’ valuation to $4.4 billion. Wellington, IVP and Fidelity participated, along with Bascom Ventures, Glynn Capital, Spike Ventures and Torch Capital. At the time, Compass said the funding would bring it closer to its “2020 by 2020” goal: capturing 20 percent market share in 20 U.S. cities by 2020. It also teased an international expansion that has not come to fruition.

Series G: $370M
Share price: $154.27
Share of company: 5.78%

Compass’ most recent funding — $370 million in July 2019 – valued it at $6.4 billion. The round, led by SoftBank and Dragoneer, was earmarked for geographic expansion plus research and development spending. The Canada Pension Plan Investment Board, QIA and Alumni Ventures Group also invested. By the end of 2019, Compass hit 18,000 agents with $91.3 billion in sales, according to RealTrends.





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