Zoopla raises whopping £3.75 million to disrupt older property sites

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Property tracking startup Zoopla has closed a £3.75 million round of new funding from venture capital firms Atlas Venture and Octopus Ventures. The move goes against the grain of a lack of funding for startups and also the downward property trend, but is also unsurprising. Venture capital is supposed to be counter-cyclical and VCs are tending to put bigger rounds into the startups they have the most confidence in. And I guess Zoopla is out to accelerate while other, older property site business models take a beating in this market. Zoopla has now raised a total of almost £5.5m.

Launched less than a year ago Zoopla now claims to be one of the top five most-visited property websites in the UK according to Nielsen (Dec 08) with over five million visits and 40 million page views in its first 12 months.

Zoopla has a lot of clever features including one where you can ‘claim your own house’ and start extolling its features, and a feature called ‘tempt me’ where potential sellers can be lured into the market for the right price – something that might well appeal to credit-crunched consumers. It is also out to disrupt older property sites: you can list your home for sale either direct or through an agent. It also targets agents themselves in an attempt to lure them from aggregators like RightMove.

Alex Chesterman is Zoopla’s founder and CEO, and previously co-founded ScreenSelect.co.uk (now LOVEFiLM.com). Other backers of Zoopla include Nauiokas Park LLP as well as angel investors Sherry Coutu (who founded Interactive Investor), Robin Klein of the Accelerator Group, Simon Murdoch, Andy Phillipps and William Reeve.

  • http://www.localdatacompany.com Scott Jones

    Wow!
    Fair play to them.

  • http://www.qype.co.uk/ Phil Chambers

    Great to see the Gumtree alumni doing well :)

    Congrats!

  • Pamela Carter

    I cannot quite see what Atlas and Octopus are doing here? The website has potential but that is where it stands and where it ends. We have seen the era of ‘bubbles’ and what it does to businesses and investors. Since I represent an institutional investor in one of the two named funds, I am worried about the risk Octopus are taking. This is way beyond any ‘high risk – high return’ rationale and I want to know When will Octopus stop wasting our money? Promotion Space, AdGate, T4 Media, Luter Pendragon, The History Press – they are all utter and compete failures with next to nothing exit values! Will Zoopla! be different? Remains to be seen.

  • Simone De Creys

    3.7 million is not a whopping amount! We were approached by Zoopla! some time ago and for what they want to achieve this is NOT going to be enough. The business is riddled with potential legal issues and problems and a substantial provision against that needs to be made. Although cost-wise it will be inexpensive to run, in order to achieve market visibility they will need to expand their online advertising. Google are also in the race to develop property websites and I agree the era of mega exits and websites being sold for hundreds of millions is well and truly over. People will still need the estate agents, this website covers step 1 of the property buying/selling process. I think this is a very high-risk venture and that is why we decided not to support it. Somehow the analogy with LOVEFiLM is ridiculous. This has nothing to do with it.

    • snoop

      please clarify the legal issues comment?
      Also what % of the company have they sold down?

  • http://www.ojointernet.com/noticias/zoopla-consigue-375-millones/ Zoopla consigue 3,75 millones

    […] un sitio web de información acerca de propiedades, ha recibido una ronda de financiación de 3,75 millones de libras por parte de Atlas Ventures y Octopus […]

  • http://uk.techcrunch.com Mike Butcher

    3.7m is quite a lot in this downturn I would say. The LoveFilm reference is not an analogy – just that one of their guys was involved before.

    BTW it’s really amazing to see an institutional investor kick off like this. Are you going to call Octopus and pull your backing?

  • http://www.veedow.com Fabio

    It’s ironic to see people washing their laundry in public in this way. Probably sad more than ironic…

  • http://www.picturetheuk.com James Penman

    Fabio – it’s astonishing.

  • http://www.parkparadigm.com/2009/01/19/data-ai-web-repeat/ The Park Paradigm - Data, AI, Web, Repeat.

    […] Zoopla.co.uk announced a further GBP3.75 million investment round in which we are very excited to be participating alongside Atlas Venture and Octopus Ventures. I […]

  • Michael Banks

    Having just taken one of Zoopla’s direct competitors to exit I can understand the lively debate on this venture. It’s a tough market for property-related assets right now.
    However, in a market filled with slow, old fashioned media-run me-too competitors I’ve found the Zoopla approach to be a refreshing change by a credible team. Online property media has long been due a game-change and I have every faith that Alex and team can give it one.
    If Zoopla can manage to fulfil their aim to become the pre-eminent source of UK property data, then the potential income (and exit value) looks promising. Property may be in a slump now but it’s still the subject of extensive dinner-table conversation. This seems to be where Zoopla has cleverly focussed the business. I’ll watch this site with interest.

  • http://www.arenaflowers.com Will

    Congrats on the fundraising, guys.
    Doug is an old eBay/Gumtree friend, so good to see it going well. Always tricky finding finance in such times!

  • http://www.housepricecrash.co.uk Brendan McLoughlin

    Michael isn’t the reality that no one has a dinner party to announce they have been re-possessed it’s just not fashionable.

    Last time I had a dinner conversation about property over dinner recently where people who once boasted how well they were doing started talking about divorce, negative equity and credit problems they were having! It was all very uncomfortable and even made the food taste bad.

    Still when there is blood in the streets….

  • http://www.freddestin.com Fred Destin

    @Pamela: if you are a real institiutonal investor (which I highly doubt) this is a comment worth substantiating. Backing a second time around entrepreneur like Alex whose company has become #5 in the space in a year on tiny marketing, whose competition is wobbly at best and which operates in a space that has proven monetization methods is the exact opposite of a bubble investment.

    Michael is spot on and Will is correct that have great talent here e.g. Doug which is half the battle.

    As for “blood on the streets”, better to give homeowners all the right instruments to help them make smart decisions, particularly in a tough and volatile market.

  • http://www.housepricecrash.co.uk Brendan McLoughlin

    Fred I 100% agree better that homeowners are armed with transparent information.

    What I meant is giving a start-up like Zoopla the funding to take on the agents while there is blood in the streets and most investors are panicing, business models are falling apart and money is running out is exactly the right time to invest.

    When I met Alex a while back he certainly seemed very driven. There is no doubting though house price sites are more boring when prices are falling.

  • http://www.africabillboard.com Reginald

    Great! they are doing well but i think they need to target UK commercial property and rental rates.

  • http://www.wreeve.com William Reeve

    I echo Fred’s comments above. This is a highly monetisable space, with a very strong product managed by a great team. And I add two other thoughts:
    1) LOVEFiLM is relevant in a couple of ways. One is that the Octopus guys are investors in it, and were among the very early investors when Alex co-founded it. The other is that LOVEFiLM (or rather, ScreenSelect – its old name), like Zoopla, was not the first horse into a very competitive race. Octopus’ team (and many of its investors individually) knows that, without Alex Chesterman, LOVEFiLM/ScreenSelect would not be the leading international online film rental business in the world, and might well be in the graveyard with many of its erstwhile competitors. Alex’s team knows how to create value in competitive races.
    2) The technology is world-class. Zoopla’s technology is distinctive and superior. Valuing the UK’s largest asset class, item by item, more accurately than anybody in a truly scaleable fashion, is a useful thing to be best-in-class at. Just ask RBS and HBOS, and imagine how you ‘mark-to-market’ a loan book with tens of thousands of properties in a market which is moving by 1% a month. Is the answer worth billions? Isn’t it…?

  • http://uk.techcrunch.com/2009/01/23/what-property-recession-nestoria-launches-wherecanilive-mashup/ What property recession? Nestoria launches WhereCanILive mashup

    […] “privately backed” but faces plenty of competition not least from Zoopla which now has £3.75m in funding to play with. That, and another player I am hearing about which is poised to bring yet […]

  • http://realtorsonwordpress.com/2009/01/in-uk-real-estate-today-mon-jan-19-%e2%80%9809/realty-international/uk-related-realty-issues-topics/ In UK Real Estate Today; Mon. Jan 19 ‘09 :

    […] Zoopla raises whopping £3.75 million to disrupt older property sites […]

  • Simone De Creys

    I can understand the sentiments – obviously people have to believe in a business model before they invest in it. We know that UK investment funds and portfolio investors like to play it ‘risky’ because 2 out of 10 investments may work and bring in the bacon. Whether or not Pamela is an institutional investor is hardly the issue here. The speed at which some UK small-to-mid investment funds are burning money is mind boggling. Octopus in general have a rather unimpressive portfolio at the moment – Zoopla! may prove to be successful but they need to ditch other slow-moving and totally unfit investments in order to concentrate on more viable businesses. Pamela’s point was about Octopus not about Zoopla!

  • Simone De Creys

    William I am not altogether sure you know what you are talking about? What again is so distinctive about Zoopla? Alex Chesterman or? I am missing the plot here – let’s hope he can turn this into gold. Unless they start lashing out on advertising they will run into trouble.

  • Jeremy Whitcut

    Well, at least somebody at Octopus has a bit of brains to put money in a risky, but potentially successful venture. However I cannot say the same about the Octopus PE team in general. I am talking about certain ex-Bridgepoint appointments who are now burning investors money at a horrendous rate. Some of their decisions are pathetic and come under the ‘what not to invest in’ case-study category. Pamela is probably right – investing recklessly in the boom, Octopus have littered their portfolio with ‘basket cases’. One also gets the feeling that the days of the ‘lucky exits’ are over. I doubt a later-stage IPO of Zoopla! will be possible, being acquired by a big brother – yes, if the brand becomes Amazon! Anyway, keep up the good work and all the best!

  • Martyn Powell

    Pamela (I can imagine not your real name) I understand your point precisely. I represent an institutional investor and after having observed Octopus and their portfolio for the last 12 months I have to agree with you – unimpressive and poorly performing. Some of our investigations uncovered highly controversial pre-pack deals, restructuring and MBOs which Octopus Private Equity have supported even before the crunch hit home. If one is to dig deeper – personal friendships leading to grave conflicts of interests between their head of equity and a certain self-professed BIMBO ‘expert’ – Nash give a rather negative impression of the way Octopus hedge their bets. If all their investments are based on ‘he’s my buddy’ – and not sound business plans, one should steer clear from advising in favour of Octopus. As for Zoopla! – I would not feel so much at ease with Octopus breathing down my neck – that again depends on who the chairman is. I have a great level of respect and trust in Atlas – I have heard about Fred and I am sure he knows what I mean. Zoopla! has a tremendous potential but Octopus are no longer up to their best so Fred, you will be better off with other partners!

  • http://zooplauk.wordpress.com/2009/03/30/zooplas-grand-designs/ Zoopla!’s Grand Designs « blog.zoopla.co.uk/

    […] raised £3.75m in venture capital to continue to develop our service […]

  • http://www.iflorist.co.uk Simon

    As for “blood on the streets”, better to give homeowners all the right instruments to help them make smart decisions, particularly in a tough and volatile market.

  • http://www.flowerbysuzyliu.co.uk flower delivery uk

    I would also like to raise the money for my business…lol!!

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