Real Estate

SoftBank doubles down on real estate tech as VC interest in the space climbs

September 27, 2018
SoftBank is on a real estate spree.

The Japanese telecom giant's $100 billion Vision Fund has invested $400 million in Opendoor and led a separate $400 million round for Compass. Both companies are real estate tech businesses that operate online platforms for buying and selling homes. Opendoor, which has also announced $2 billion in debt financing, is valued at an estimated $2 billion with the new funding. And Compass has now doubled its valuation to $4.4 billion.

The pair of fundings is part of a larger trend toward big bucks going into real estate tech companies in the US:  
 

Including the rounds for Opendoor and Compass, these companies have brought in $2.2 billion so far this year, per the PitchBook Platform, and 2018 is on track for more than $3 billion of capital invested in the space. Last year also saw a significant amount of funding, though the total skews unusually high, as the majority of the $5.4 billion poured into the industry consisted of a $3 billion round for WeWork.

As the data shows, VC investment in real estate tech started to boom in 2014, and it hasn't slowed down. Deal count has gone up every year since then, and this year is on pace for a decade-high total.

Opendoor's VC fundraising history falls in line with the trend. The San Francisco-based company secured its first round in 2014, and it's raised several rounds since then, including a $325 million Series E earlier this year. All in all, Opendoor has raised more than $1 billion in equity funding. In addition to SoftBank, its investors include Khosla Ventures, General Atlantic, Andreessen Horowitz and NEA, among others.

Compass, which has also secured more than $1 billion, started fundraising a bit earlier. The company, headquartered in New York, brought in an $8 million seed funding in late 2012 and went on to raise several more rounds. Last year, Compass raised $450 million from the SoftBank Vision Fund. Wellington Management, IVP, Thrive Capital, Founders Fund and .406 Ventures have also backed the company.

Both companies operate their real estate platforms in regions throughout the US. Opendoor has a presence in 19 major cities, with plans to expand to a total of 50 by the end of 2020. Compass, meanwhile, is in 17 locations across the country, and it seems to have a focus on luxury markets like the Hamptons; Santa Barbara, CA; and Aspen, CO. It's in the process of expanding both domestically and internationally.

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