Today, the real-estate startup Compass is announcing that it has raised another $100 million — money that it plans to use to expand its sales and rental listings service to every major city in the U.S., as well as build new CRM technology to integrate client, listings and transactions data. The Series E values the company at a whopping $1.8 billion.
Compass had over $100 million in the bank before the raise, so in a sense it didn’t need the money. This is about “really aggressive growth,” Chairman Ori Allon told TechCrunch in an interview. Compass is in 10 regions in the U.S. currently (these cover major metros like New York, Boston, Miami, Washington, and LA). In the next 12 months it will reach 10 more on top of that.
The funding comes from new investor Fidelity Investments, as well as previous investors IVP and Wellington Management — who respectively led its Series C ($50 million) and Series D ($75) investments. It brings the company’s total raised to date to $325 million.
Compass has come a long way since we first reported on the company when it was still in stealth mode (and called Urban Compass) and speaking of its ambitions to shake up how people find places to live in cities — but not revealing too many details about what form its business would take.
Fast forward several months, and a business began to emerge out of a large trove of ideas: leveraging search technology to help pair people with places that fit their needs, providing more details to help them better evaluate neighborhoods; and matching them with agents to help seal the deal.
Co-founded by Allon, an ex-head of engineering at Twitter (who was also a search engineer at Google; he came to both companies by way of acquisitions of his previous companies), the company today has seen some significant growth in its business of listing apartments and homes to rent or buy.
Over the last 24 months, Compass saw its agent population grow by 500 percent, while the company says it is on track to complete 16,000 transactions and over $14 billion in sales this year, with over $350 million in annual revenue.
“Safe as houses”, the mantra that points to how many see the real estate market to be one of the more solid investments you can make, may have taken a major hit with the sub-prime mortgage crisis engulfed the financial industry. But houses and tech aimed at helping people engage better with the housing market remains a hot area, and Compass’s funding comes amid a lot of growth at the company.
The move to CRM is interesting for the company in that it’s creating a new revenue stream beyond the basic transacting around properties by moving into services for others in the industry. “There is so much data that you can leverage,” Allon said.
Notably, Compass to date has focused on the high end of the real estate market, rather than the rough-end-ready low end of shabby fixer-uppers and less expensive neighborhoods. It’s an approach partly borne out of the fact that the more expensive places are more likely to yield better returns to Compass, which takes a commission on the transactions. But also a data play. The thinking is that more value brings in more data and more need for better data. However, as the company continues to grow this will evolve, too, said Allon.
“It’s going to happen as we get more coverage and extend to more cities,” he said.
One thing that will not evolve so quickly, it seems, are more extensions of what Compass might offer as products. I asked about Cadre, the real estate investment platform backed by the Kushners, and whether Compass would want to move into similar areas, either by acquisition or organically. The answer for now is no.
“We have a pretty well-defined growth and expansion strategy and we will keep going in this direction: we want to hire the best agents and offer them the best technology,” said Allon. “Right now, we are not interested in investing platforms or other areas like it. There are a lot of opportunities out there but what’s made us successful so far is focus. We just want to make sure we have as many people using our existing service as we can.”
Updated with interview with Compass.