Buying and selling residential real estate is a complicated process regardless of where a consumer lives. Numerous American startups are working to simplify that procedure for users. However, the difficulty of digitizing real estate is considerably greater in Brazil because there is no MLS. One of the largest, if not the largest, capital rounds ever raised by a Brazilian startup was attracted by a company that aimed to act as a “one-stop shop” for Brazilians to help them manage the home purchasing and selling process. As per loft 425m series d1sazevedotechcrunch
Digital real estate company Loft reported in March 2021 that Series D fundraising of USD 425 million, led by New York-based D1 Capital Partners, had been finalized. Several other investors, including Advent, Altimeter, DST, Silver Lake Waterman, Soros, Tarsadia Capital, Flight Deck, Tiger Global, Andreessen Horowitz, Caffeinated, Fifth Wall, Monashees, QED, and Vulcan, participated in the round, as well as a mix of fresh and seasoned investors. As a result of the deal, Loft is now valued at USD 2.2 billion, a significant increase from its January 2020 valuation of USD 175 million when it raised a USD 175 million Series C. For any startup, but especially one established less than three years ago in Latin America, a financing of this scale is significant. As per loft 425m series d1sazevedotechcrunch
Consequently, the area has experienced rapid expansion, with Brazil’s startup scene growing. Loft, founded in São Paulo, has also experienced significant development. The company told last year that it had generated over USD 150 million in yearly revenues in its first full year of operation from more than 1,000 transactions, despite recently becoming less open about its financials.
According to co-founder and co-CEO Mate Pencz, the number of listings on Loft’s website increased 10 to 15 times in 2020. With the help of more than 30,000 brokers, the firm currently actively manages more than 13,000 property listings in about 130 areas throughout São Paulo and Rio de Janeiro. In addition to being more receptive to doing business online, more people are choosing to buy rather than rent in the nation. According to Pencz, Loft had more than 6x YoY growth with thousands of transactions during 2020. The number of active listings is approaching the tens of thousands and will likely soon reach the hundreds of thousands. As per loft 425m series d1sazevedotechcrunch
In 2020, the company’s GMV (gross merchandise value) and sales both saw considerable increases, according to Pencz, who declined to go into further detail. He did mention that those numbers are far higher than they were and that Loft has a clear path to profitability. Pencz remarked that Loft has quickly adjusted to the new environment and that COVID has only fueled or hastened our development.
In 2018, Pencz and Florian Hagenbuch, currently Loft’s co-CEOs, started the company. The platform aims to bring Latin American real estate into the digital age by creating digital replacements for analogue legacy processes and utilizing data to provide transparency to notoriously opaque industries. According to Pencz, Zillow is the American real estate digital startup with the model most similar to Loft’s.
The National Association of Realtors describes MLSs as private databases produced, maintained, and paid for by real estate professionals to assist their clients in buying and selling property. MLSs are useful to prospective buyers and sellers in the United States. For the Brazilian market, Loft invested years and a lot of money in building its databases. It provides services for insurance, renovations, and rentals, in addition to assisting customers in buying and selling homes.
By purchasing one of the biggest Brazilian mortgage brokerage firms in 2020, Loft also made a foray into the mortgage industry. According to Pencz, the firm is currently among the top three mortgage originators in the nation. He compared Loft to Better.com, which is situated in the United States and assists customers with mortgage applications. The startup’s staff has increased in size over the past 12 months, going from 450 in January to 700 now. According to Pencz, it has greatly expanded its IT team in particular.
Notably, the investment at the time of its series C was Andreessen Horowitz’s first and first in Brazil and Vulcan Capital’s first and only in Latin America (the investment arm of Microsoft co-founder Paul Allen). With this most recent fundraising round, Loft has successfully raised an amazing USD 700 million. Additional supporters include Brazil’s Canary and a collection of well-known angel investors like Max Levchin of Affirm and PayPal, Joe Lonsdale of Palantir, Mike Krieger of Instagram, and David Vélez, CEO and creator of Brazilian fintech Nubank, among others. Many publicly traded real estate funds have also helped Loft to raise over USD 100 million in loan funding. As per loft 425m series d1sazevedotechcrunch
In part, Loft intends to use its new funding to grow throughout Brazil, Latin America, and beyond. Additionally, the business intends to look into additional M&A possibilities.
According to Pencz, Loft had excellent capital at the beginning of the fiscal year. In addition to focusing even more on the core company, strategic acquisitions may be in the works. Following in the footsteps of some of the other Brazilian businesses that have recently been expanding internationally, Loft also intends to make Loft as much of a regional and possibly worldwide firm.
One of the things that particularly excites Andreessen Horowitz General Partner Alex Rampell’s company about Loft is the idea that it will serve as a transactional marketplace for the largest asset class in one of the world’s largest economies. Initially an iBuyer, Loft now also has a thriving marketplace. The company participated in each subsequent fundraising round after leading Loft’s Series A in July 2018.
D1 Capital’s founder, Dan Sundheim, stated that discovering opportunities “at the convergence of structural shifts, secular trends, and world-class management teams” is a key component of his company’s investment strategy.
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