A mere concept less than a year ago, second-home startup Pacaso just hit a $1.5 billion valuation and is expanding internationally.
The San Francisco-based platform for buying and selling fractions of vacation homes said today that it raised $125 million in a Series C round led by SoftBank’s Vision Fund 2 — a first-time investor in the company — and will begin operating in Spain later this year.
Fifth Wall, the largest proptech-focused venture capital firm, also participated in the Series C, alongside existing investors Greycroft, Global Founders Capital, Crosscut and 75 & Sunny Ventures. Bloomberg first reported the news. Pacaso said in a release that its equity funding now totals more than $215 million.
Fundamentally, Pacaso wants to make it easier to buy, own and sell a shared second home in high-end vacation markets like Lake Tahoe, Aspen and Malibu. Through its platform, prospective owners can buy as little as a one-eighth share of a property worth millions; Pacaso’s network of agents help them establish limited liability companies for joint ownership. The buyers then pay Pacaso to manage, maintain, and facilitate access to the home.
Pacaso’s business grew exponentially during the pandemic alongside the swift rise in home prices and swelling demand for second homes among newly mobile white-collar workers. The company manages $200 million of real estate on its platform and has an annualized revenue run rate of $330 million, it said.
In the early spring, homes in most of the 25 markets where Pacaso operates were trading for 30 percent more than they were a year earlier, Allison, who is CEO of the startup, said in an interview. Recent months have witnessed a “cooling off” of the luxury second-home market, but prices are still up 15 percent year-over-year in most of its locales.
“The market is still crazy, just not as crazy as it was at the peak,” Allison said. “It’s still hotter in second-home markets than primary-home markets.”
Pacaso’s attempt to reinvent the timeshare model has not been without challenges and uncertainties. While prospective buyers have flocked to its website — traffic was up 196 percent in the second quarter from the first, the company said — how well the fundamentals of the sharing economy hold up in luxury single-family real estate is an open question.
“Exponential growth adds exponential complexity,” Allison said. The company’s expansion beyond the U.S. — first in Europe, then eventually in Mexico and the Caribbean — will only make quality control harder.
“We’ve gone from basically zero to 120-plus people on our team across 20 states and three countries. We’ve gone from one market a year ago to 25 destinations today,” he said. “All that growth, and we’re not slowing down. We’re just speeding up.”
An IPO is a possibility but not in the near future, Allison said.
“When it makes sense to go public, we plan to consider that opportunity seriously,” he said. “But right now we’re very well-funded and don’t have any near-term plans to announce.”