Less than a year has passed Pacaso Officially launched. However, this fast-growing real estate startup has reached a triple-digit revenue run rate, attracting big-name investors — and causing uproar among long-term residents buying holiday homes in areas such as Napa Valley.
Pacaso announced a $125 million round of financing on Tuesday, led by SoftBank, through its $40 billion Vision Fund 2. SoftBank supports Opendoor, DoorDash, Coupang, Didi and other high-value technology companies.Its investment in Pacaso is a vote of confidence in a one-year startup founded by the former CEO of Zillow Group Spencer Raskoff And dotloop founder Austin Alison.
The C round of financing also included the participation of top real estate investor Fifth Wall, which valued Pacaso at $1.5 billion. To date, the total equity financing is US$225 million, including a cash injection of US$75 million six months ago.
Pacaso (pronounced “Picasso”) uses software and data to make it easier for more people to own vacation homes by dividing ownership into several different parts as part of a limited liability company-from two to eight owners.
Pacaso sometimes buys a house and then finds the owner; it also buys a house after enough people have shown interest in a particular property. Then, it acts as the owner’s representative on behalf of the group and handles various logistical tasks, such as maintenance, financing, and law. Its software platform can help owners arrange and make reservations.
The company makes money by charging the owner a 12% service fee and a monthly management fee of US$99 at the time of purchase.
The idea is to make it possible for more people to own vacation homes-at least part of it-and reduce the troubles that may be caused by co-ownership.
Rascoff, who left Zillow in 2019, called Pacaso’s product market fit “extraordinary.”
“This product touched people’s nerves and it was exciting to see it,” Lascoff wrote In LinkedIn posts.
But not everyone is so excited about Pacaso’s business.
One called Stop Pacaso immediately It has been established in California’s wine country and was founded by local residents who said the company is “the latest way for the Silicon Valley brothers and venture capital condors to make money quickly at your expense: by turning your neighbor’s house into a basically glorified timeshare Vacation.”
Pacaso sparked a controversy earlier this year after buying a house that locals believed belonged to the labor housing inventory. The company responded that it will resell the house to the sole owner and will only purchase properties in the area worth more than $2 million. Inman Report.
“We despise this company,” said David Appelbaum, a long-time technology executive who has lived in Sonoma County for 23 years and is a member of the protest group. He said that Pacaso “try to circumvent the existing rules and regulations for short-term vacation stays.”
Pacaso insists that it does not operate a timeshare model, which Alison describes as a “commercial hotel development” with hundreds of rooms and thousands of members. He said, on the other hand, Pacaso allows people to actually buy a piece of real estate, not just time. Its model also prohibits rental events and large-scale destructive parties.
“It’s like comparing bicycles to commercial buses,” Alison said. “They are completely different types of asset classes.”
The debate is now being staged in the Federal Court. Earlier this year, Pacaso sued the city of St. Helena in Napa Valley for banning the company for violating laws prohibiting timeshares. The case is still under trial.
Alison said the backlash was caused by “misinformation” about Pacaso’s housing affordability crisis. He believes that the company’s co-ownership model shifts the demand for holiday homes from mid-range to luxury homes, thereby providing local buyers with opportunities for mid-priced homes.
“This is actually part of the housing solution, not part of the problem,” Alison said.
The CEO also stated that most holiday homes are vacant for most of the year, while Pacaso’s home utilization rate is 90% to 95%.
“It is best to use houses throughout the year to support the local economy,” he said.
Appelbaum does not agree with this statement.
“You are not a co-owner. You are a short-term vacation resident,” he said. “You didn’t join a local group, you didn’t send your children to school. You are not a member of the community. You come here for a two-week vacation, and then you leave.”
Pacaso announced today that the annualized revenue run rate has reached 330 million U.S. dollars. In the second quarter of this year, Pacaso’s website and mobile applications attracted 1.8 million visits, an increase of nearly 200% over the previous quarter. Since January, its team in 20 states has increased from 30 to more than 120.
Pacaso declined to disclose specific indicators about the number of owners or homes sold, but said it has helped “hundreds” of people find a second home. It manages nearly $200 million in real estate assets. The company was saddled with $1 billion in debt in March.
This startup is riding the wind and waves Holiday home sales rise, Partly because of the pandemic and the shift to remote work. According to data from the National Association of Realtors, vacation home sales in 2020 increased by 16.4% year-on-year, and the first four months of this year increased by 57.2% compared to the same period in 2020.
Even if the real estate market cools down from record levels, Pacaso’s model is “more interesting in a weak market than in a hot market because it is a more responsible way of owning,” Alison said. The document signing service dotloop was sold to Zillow in 2015.
“At the moment of correction, people don’t stop living, they just change the way they consume,” he said.
The owner must hold a share of the holiday home for at least one year, and then can sell it at any time-profit or loss, depending on the price.
Pacaso currently has operations in 25 destinations in the United States. It plans to make its first international expansion in Spain later this year, and plans to launch it in Mexico and the Caribbean next year.
Gaingels, Greycroft, Global Founders Capital, Crosscut and 75 & Sunny Ventures also participated in the C round of financing. Other backers include Jeff Wilk, the former CEO of Amazon Global Consumer; Sukhinder Singh Cassidy and Theresia Gouw of Acrew Diversify Capital Fund; First American Finance; and Shea Ventures.