Questioning the WeSPAC, VC-backed Side and Compass face off

Plus, a 3D-printed housing community in California

National /
Mar.March 29, 2021 08:00 AM


Some questions about the WeSPAC

If at first you don’t succeed, try, try again: Two years after its failed IPO, WeWork is going public with a SPAC.

The merger with BowX Acquisition Corp. — led by Vivek Ranadivé with Shaquille O’Neal as an advisor — values the embattled flex-office company at $9 billion including debt.

That’s a fraction of WeWork’s $47 billion valuation in 2019, when it first attempted to go public. According to an investor presentation, WeWork will also get $1.3 billion in proceeds, including $800 million from investors Insight Partners, Barry Sternlicht’s Starwood Capital, Fidelity Management and others. (ICYMI, WeWork lost $3.2 billion last year.)

All this begs the question: Have we now reached peak SPAC?

So far this year, 296 blank-check firms have gone public, raising $96.6 billion, according to SPACInsider. The amount is 7 times the IPO proceeds generated by SPACs in 2019.

U.S. regulators are starting to ask questions. The SEC sent letters to Wall Street banks last week, seeking information on how underwriters are managing risk. And earlier this month, it warned investors not to invest in SPACs just because of celebrity involvement.

In a statement, WeWork CEO Sandeep Mathrani sought to reassure the naysayers. “WeWork has spent the past year transforming the business and refocusing on its core,” he said. “As a result, WeWork has emerged as the global leader in flexible space with a value proposition that is stronger than ever.”


“Pacaso is lightning in a bottle.”

— CEO Austin Allison, after the startup was valued at $1 billion,
five months after launching
 

Compass and Side are resi unicorns, but are they similar?

No sooner did the venture capital-backed brokerage Side achieve unicorn status last week than the comparisons to Compass started rolling in.

The firm, which targets “not all agents, just the best agents,” announced a $150 million round led by Coatue Management, putting its valuation at $1 billion. The capital will fund Side’s growth across the U.S., just as Compass pursues a long-awaited IPO at a $10 billion valuation.

Neither firm pioneered the idea of a VC-backed brokerage, but both claim to empower agents with better tools. (Also, neither is profitable.)

But here’s how they’re different. Compass has grown to 19,000 agents in 46 markets by elevating its own brand. Side is a white-label platform, meaning agents run their own brand and business while Side handles the back-end work.

Compass is also chasing 20 percent market share in 20 top U.S. markets, and it spent $300 million on acquisitions between 2018 and 2020. Side limits the number of agents it works with in each market.


3, 2, 1 … unicorn!

Just five months after its launch, second-home startup Pacaso is a unicorn.

The company, started by Zillow co-founder Spencer Rascoff and other former Zillow executives, said it raised $75 million at a $1 billion valuation — becoming the fastest U.S. company to achieve unicorn status.

“Pacaso is lightning in a bottle,” said CEO Austin Allison. Greycroft and Global Founders Capital led the round, which brings Pacaso’s total funding to $90 million in equity, plus $1 billion in debt.

Demand for second homes surged during the pandemic. In January, mortgage applications for second homes rose 84 percent year over year, according to Redfin. Allison said 500,000 people have visited Pacaso’s website to date. So far, 100 homeowners purchased a fraction of a second home, ranging in price from $2 million to $6 million.


STAT OF THE WEEK

$3.2B

WeWork’s net loss in 2020


Notarize nabs $130M after revenue jumps 600%

Ever scramble to get a document notarized? Us too.

Online notary startup Notarize just raised $130 million to keep building an alternative to the analog process. The Series D — led by Canapi Ventures with participation from Alphabet, Citi Ventures and Wells Fargo — tripled Notarize’s valuation to $760 million, said CEO Pat Kinsel.

He said 2020 was a year of explosive growth, with revenue up 600 percent from 2019. “It was clear when Covid hit that there was going to be extraordinary demand for our service,” he said.

Notarize plans to use the funding to accelerate growth. Currently, 31 U.S. states allow online notarizations.

Be a good Neighbor?

A company looking to be the Airbnb for self-storage has raised $53 million to expand its network of hosts and renters.

Neighbor.com helps people rent out extra space in their homes — i.e., basements, garages or attics. Fifth Wall Ventures led the Series B, with participation from DoorDash’s Tony Xu, StockX’s Scott Cutler and Andreessen Horowitz.

Founded in Utah in 2017, Neighbor.com started working with individual hosts, but since Covid hit it has targeted landlords with extra retail or restaurant space, as well as big owners like Acadia Realty Trust and Jamestown. CEO Joseph Woodbury said there are “tens of millions” of unused spaces across the U.S.


Desert mirage … or 3D-printed homes?

Two California companies are teaming up to build a 3D-printed neighborhood in Coachella Valley.

Palari and Mighty Buildings plan to build 15 homes on a five-acre parcel in Rancho Mirage, near Palm Springs.

Mighty Buildings, which raised a $40 million Series B in February, prints out modular materials that are assembled like Lego blocks. It claims it can print 3D structures twice as quickly (and with 95 percent less labor hours) than conventional construction. Each home will be 1,450 square feet and made from a stone composite material, according to Palari CEO Basil Starr.

The printed homes are more sustainable than traditional, wood-frame construction, which generates about “two tons of waste that goes into landfills,” Starr told CNN. “3D printing … eliminates that unnecessary waste.”


Small bytes

? Brazilian iBuyer Loft is valued at $2.2B after raising $425M.
? Ivanhoe Cambridge is investing $85M in four funds managed by Fifth Wall Ventures.
? Knotel tapped ex-WeWork executive Michael Gross as CEO, replacing co-founder Amol Sarva.
? Lev Capital, an online real estate finance brokerage, raised $10M from JLL and Pete Flint’s NFX.
? NYC startups raised $7.6B so far this year, putting it on track for a record, per Crunchbase.
⏰ Instashowing, a home-tour startup, raised $1.5M from former Trulia and Zillow execs including Pete Flint, Greg Schwartz, Carey Armstrong, Austin Allison and others.
? CrowdStreet is relocating its HQ to Austin from Portland, Oregon.
? Auction.com promoted chief biz dev officer Ali Haralson to president.
? BoomTown, a cloud-based marketing tool for agents, acquired transaction manager Brokermint.

 

. .


 
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