Wall Street Bets on Compass, Opendoor
September 28, 2018
Compass, a startup real estate brokerage, raised $400 million in its latest round of investment funding, and it will enable the company to accelerate its plans to take 20 percent of the market share in the 20 largest U.S. cities by 2020, company officials say. Compass CEO Robert Reffkin also told CNBC’s “Squawk Box” on Thursday that in the upcoming months, the company plans to announce that it has entered its first international market.
With the latest investment, Compass is now worth $4.4 billion, Bloomberg reports. The company is reportedly on track to do more than $34 billion in sales volume this year.
Softbank Group Corp., a Japanese investment firm that is also propping up funds for iBuyer company Opendoor, and Qatar Investment Authority led the latest round of funding for Compass. “We will continue to capitalize on our momentum nationally and internationally,” Compass co-founder and executive chairman Ori Allon told Bloomberg.
Reffkin says the company has started an acquisition strategy over the last eight months to expand into more markets. In late August, the company announced plans to buy Pacific Union International, the nation’s fifth-largest residential real estate firm based on transaction volume. The move was meant to grow Compass’s presence in several California markets. Compass, which is based in New York, has acquired nine brokerage firms around the country this year.
Compass officials told Bloomberg this summer that the brokerage hopes to not only increase its property listings but also expand into other businesses such as mortgage title transfer and relocation services. Compass also provides software tools, one of which is geared toward organizing sales data to pinpoint the best to time to list. The brokerage currently has more than 7,000 agents in 165 offices.
Softbank Group Corp. also led in $400 million of funding this week for Opendoor, which facilitates online real estate purchases. The announcement comes just three months after Opendoor raised $325 million. Opendoor’s parent company, Open Door Labs Inc., uses software that allows sellers to receive an instant cash offer on their homes at fair market value. The startup currently operates in 19 cities and has a goal of expanding to 50 markets by 2020. Company officials say they’ll use the latest round of funding to fuel that expansion.
“Compass Is Said to Raise Funds at $4.4 Billion Valuation,” Bloomberg (Sept. 27, 2018); “Compass CEO on $4 Billion Valuation and U.S. Real Estate,” CNBC (Sept. 27, 2018); and “Opendoor Offers Fast Cash for Homes. SoftBank Bets $400 Million on It,” Bloomberg (Sept. 27, 2018)
Updated: August 16, 2019