Pacaso, a startup less than a year old looking to give more people a second home chance, announced Wednesday that it has received $ 75 million in growth funding valued at $ 1 billion.
Greycroft and Global Founders Capital jointly managed the $ 75 million equity financing, which is noteworthy for several reasons.
On the one hand the team. Former Zillow executives Austin Allison and (CEO and Co-Founder) Spencer Rascoff developed the concept of Pacaso after they left Zillow about 18 months ago. (The publicly traded Zillow now has a market capitalization of $ 32.9 billion.) The company offers people the opportunity to purchase and co-own a second home.
“We realized that having a second home was a very powerful luxury in both of our lives. We’re both fortunate enough to have a second home and that made a huge difference to us and our friends and family, ”said Rascoff. “Our goal was to try to democratize access to second homes so that it is not only a luxury for 1%, but hopefully can be available to many tens of millions of other people around the world.”
Another special feature of this raise is that Pacaso, which only came on the market in October 2020, achieved unicorn status faster than any other company, according to an internal company analysis of Crunchbase data.
“Pacaso is growing incredibly fast, faster than anything I’ve never participated in,” Rascoff told TechCrunch. “And the reason it’s growing so fast is because consumers love the concept and they love the idea of having a second home at a much cheaper price.”
In addition to the equity financing announced today, San Francisco-based Pacaso has also secured $ 1 billion in debt financing. At the time of its founding last fall, the startup had raised $ 17 million in a Maveron-run Series A and $ 250 million in debt financing.
Sukhinder Singh Cassidy and Theresia Gouw of the Acrew Diversify Capital Fund; First American Finance; Shea Ventures; Jeff Wilke, former CEO of Amazon Worldwide Consumer; and other notable angel investors also participated in the recent funding.
With a unique co-ownership model made possible by the formation of a real estate-specific LLC, the company aims to reduce the costs and hassle of second homes. It also offers vacation home owners an alternative way of renting out their property.
Pacaso distinguishes his model from the age-old concept of timeshare, which involves selling the right to use a certain amount of time in a condominium or hotel. Pacaso aims to bring a small group of co-owners together to purchase a stake in a single family home and “enjoy permanent access all year round”.
This is how it works: Pacaso either buys a house or takes a stake in a house. The company then works with local real estate agents to market the properties. It then sells stakes in the house – from an eighth of the house to a higher percentage.
Pacaso holds a broker license in more than a dozen of the major secondary home markets including Napa, Lake Tahoe, Palm Springs, Malibu and Park City. Buyers can view curated offers on the startup’s website that include active offers as well as previews of homes that will be considered for sale based on buyer demand.
In addition to curating the listings, Pacaso also offers integrated financing, “upscale” interior design, professional property management and proprietary scheduling technology.
Since launch, Pacaso says more than 500,000 people have visited the site and 60,000 “prospective buyers” have engaged Pacaso to learn more about second home co-ownership. So far, the company has helped around 100 families become co-owners of second homes.
Allison estimates that there are around 100 million second homes worldwide, the vast majority of which are vacant 10 to 11 months a year.
“On a monthly basis, that number is growing very quickly,” he said.
The company plans to use part of its new capital to expand into new markets – from the west coast to the east coast. Eventually it plans to expand globally as well – in Europe and possibly in Mexico and the Caribbean. The debt will be used to buy shares in additional houses.
“There are tens of millions of families making enough money to have some disposable income, and about 75% of them dream of having a second home,” he said. “But they are held back by either cost or the inability to justify such a purchase. So there is this massive problem and we have come up with a really innovative solution, namely co-ownership. “
Over time, the company hopes to offer homes in a wider price range, including homes with lower price tags, Allison noted.
Greycroft co-founder and partner Dana Settle described Pacaso’s business life as “nothing less than momentous”.
“Pacaso is creating a new category that will dramatically change the way people approach buying and owning a second home,” she added.
Like most venture firms, Greycroft was drawn to the caliber of Pacaso’s founding team.
“This is a team that knows this market incredibly well and has worked together before,” Settle told TechCrunch. “When you see how quickly they can be up and running, that’s literally proof of that point.”
She also compared the company to Uber and Airbnb, which also turned otherwise underutilized assets into a business.
“This is another opportunity to do this – use technology to create more accessibility in a market,” said Settle.
To support his expansion, Pacaso has hired Nina Tran as Chief Financial Officer. Tran brought Waypoint Homes public through its merger with Starwood Waypoint and acted as CFO through its sale to Invitation Homes.
Rascoff has certainly been busy lately. He also heads Supernova Partners Acquisition Company, which recently announced it was merging with Offerpad to bring that company public. Rascoff is also an investor in Doma, formerly known as States Title – another proptech going public via a SPAC merger. He has also supported a number of startups, including Cheese, a fintech that recently launched a digital banking platform primarily intended to serve the Asian-American community, among others.