Some got bailouts, others got boosters — but across the board, proptech firms continued to reel in cash in 2020 as the pandemic forced the slow-to-adapt real estate industry to fully embrace technology.
As tech stocks led Wall Street’s recovery this spring, private investors also pulled out their checkbooks to fund hospitality startups and companies looking to digitize the home-buying process, from searches to securing titles.
SoftBank continued to double down on real estate tech. Other prolific investors included proptech-focused funds such as Navitas Capital and Zigg Capital, as well as generalist investors like Founders Fund and Greycroft.
All told, investors poured nearly $2 billion into the top 10 deals of the year, according to data compiled for The Real Deal by Pitchbook and the Center for Real Estate Technology and Innovation. Many were late-stage investments, and the average deal size was $198.7 million, according to the data.
Here’s the breakdown of the biggest deals:
1. REEF Technology | $700 million
The biggest funding round of 2020 went to REEF Technology, a Miami startup that turns empty parking lots into logistics hubs. In November, a syndicate including SoftBank and Mubadala Corp. invested $700 million, fueling REEF’s planned expansion from 4,800 to 10,000 locations. (It also inked a $300 million infrastructure partnership with Oaktree Capital Management.) Founded in 2013, REEF provides hardware, software and management services to parking lot owners; more recently, it added cloud kitchens, healthcare clinics, last-mile delivery and experiential retail to its portfolio. Similar to WeWork, REEF leases real estate itself.
2. Pacaso | $267 million
Spencer Rascoff revolutionized the way people search for homes with Zillow. Now, he’s helping people find second homes with Pacaso, a startup he launched in September with CEO Austin Allison. Pacaso, which lets people buy from one-eighth to one-half of a vacation home, raised $17 million in equity and $250 million in debt, which it will use to purchase homes before quickly re-selling them. Investors include former Starbucks CEO Howard Schultz, Amazon exec Jeff Wilke and former Zillow exec Greg Schwartz.
3. Better.com | $200 million
Buoyed by heightened demand for digital home loans, Better.com raised $200 million at a $4 billion valuation in November, setting off rumors of a potential IPO in 2021. But behind the scenes, CEO Vishal Garg was ensnared in several lawsuits alleging financial mismanagement, Forbes reported. Garg’s former business partner, Raza Khan, also claimed that the CEO threatened to burn him alive. A Better.com spokesperson called the accusations “baseless.”
4. Sonder | $170 million
Despite the hospitality apocalypse unleashed by the pandemic, Sonder raised $170 million in June to scale its business — that is, leasing apartments and turns them into short-term rentals. The round valued the San Francisco startup at $1.3 billion, up from $1.1 billion. Despite a drop in business and layoffs, investors said the cash infusion was not a bailout. After Sonder’s bookings dropped in March, it secured rent reductions and pivoted to longer-term stays, avoiding the fate of rivals Lyric and Stay Alfred, which shuttered permanently because of the pandemic. Sonder has raised $560 million since 2012.
5. Procore | $150 million
After shelving a planned IPO this spring due to market volatility, construction startup Procore raised $150 million in the private market, securing a $5 billion valuation despite economic distress. Founded in 2002, Procore sells construction management software, with a client list that includes major developers and contractors, including Brookfield Properties and Turner Construction. In 2019, the company generated $289.2 million in revenue, but lost $83.1 million, according to regulatory filings.
6. States Title | $123 million
A flurry of startups is trying to streamline real estate closings, including States Title. The digital mortgage, title and escrow company, which was founded in 2016 by CEO Max Simkoff, raised $123 million in May from Greenspring Associations, Foundation Capital and FifthWall Ventures. That puts its valuation at $623 million. Historically, the title industry has been dominated by the so-called “Big Four”: Fidelity National, First American, Old Republic and Stewart. States Title is the biggest of the tech firms competing for the Big Four’s business.
7. Vacasa | $108 million
After weathering a steep drop in business and layoffs, vacation rental startup Vacasa nabbed $108 million in June from Silver Lake, the private equity firm that helped bail out Airbnb this spring. Based in Portland, Oregon, Vacasa handles bookings, housekeeping and customer service for investors who rent out their homes, in exchange for a 20 to 40 percent cut.
8. Homeward | $105 million
Home-buying startup Homeward secured $105 million to help buyers put their best foot forward. The Austin-based company, founded by Tim Heyl, a top agent at Keller Williams, raised $20 million in equity and $85 million in debt in May. The company loans prospective buyers money to make cash offers on their next home, and promises to buy their old home if they can’t sell.
9. LendingHome | $75 million
LendingHome, which makes fix-and-flip loans to real estate investors, raised $75 million in December to accelerate growth as more distressed properties hit the market. The round was led by Benefit Street Partners, and brings LendingHome’s total funding to $249 million, according to Crunchbase. The San Francisco-based startup, founded in 2013, also added Michael Bourque as CEO.
10. Orchard | $69 million
Orchard, a home-buying startup that allows owners to buy a new home before they sell their old one, raised $69 million in September to expand its offerings. The funding came eight months after the three-year-old startup nabbed $36 million. Formerly called Perch, the company added title, escrow and lending services this year. CEO Court Cunningham said the goal is to manage the entire home-buying process.