Zillow co-founder Spencer Rascoff is betting big on iBuying — a move that pits him against the real estate giant he helped to build.
Rascoff’s blank-check firm Supernova Partners Acquisition Company has struck a deal to take iBuying startup Offerpad public in a $3 billion deal, the companies said Thursday.
The deal is expected to generate $650 million in cash for the six-year-old instant home-buyer, which competes with both Zillow and industry leader Opendoor, which went public in a SPAC deal last year.
The Offerpad deal includes a $200 million PIPE (private investment in public equity) from investors including funds managed by BlackRock, Zimmer Partners and Taylor Morrison. Affiliates of Supernova are also investing $50 million directly.
Rascoff, who co-founded Zillow, stepped down as CEO in February 2019, when co-founder Rich Barton took the helm to build what has been dubbed “Zillow 2.0.” That includes a major bet on iBuying and the addition of ancillary services like home tours and mortgages to give consumers a “one-click nirvana.”
Supernova — whose partners include Sotheby’s Financial Services’ Alexander Klabin, ex-Blackstone Group exec Robert Reid and former Carlyle Group principal Michael Clifton — raised $250 million for its third SPAC last month.
In a statement, Rascoff said iBuying has “barely scratched the surface of real estate.”
“We believe online real estate as a whole is poised to grow rapidly in the coming years and that Offerpad is incredibly well-positioned to grab a huge piece of this market,” he added.
Arizona-based Offerpad was founded in 2015, a year after Opendoor, and has been nipping at the heels of its larger rival. Led by CEO Brian Blair, Offerpad has raised $155 million from investors, according to Crunchbase. It has projected $1.4 billion in revenue this year.
In addition to buying homes, Offerpad allows sellers to partner with it to list their home with a back-up cash offer. It also has add-on services, including home improvement advances, extended stay options and title and mortgage.