Compass Real Estate

Compass Raises $400M from SoftBank, Valuing the Real Estate Technology Startup at $4.4B

Compass Raises $400M from SoftBank, Valuing the Real Estate Technology Startup at $4.4B

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This Thursday, Compass CEO Robert Reffkin joined CNBC's "Squawk Box" to discuss new funding from Japanese multinational holding conglomerate SoftBank. News of the company's latest funding comes less than a year after SoftBank's $450 million investment in the company in December 2017. That round had followed a $100 million funding from investors including Fidelity Investments. The Compass CEO discussed his upcoming plans for the company and the future state of the real estate technology industry.

Compass CEO on $4 billion valuation and US real estate from CNBC.

Following the $400 million investment, the New York-based company will have a $4.4 billion valuation. Reffkin added that the financing will allow the company to accelerate its vision of 20 percent market share in the top 20 United States cities by 2020 and the company's first international expansion.

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"Real estate is the largest asset class in the world," founder Ori Allon said in a recent statement, "and we are excited to bring Compass technology to international markets."

In addition to major cities such as New York, Boston, Washington and San Francisco, Compass has expanded into various cities including San Diego, Dallas, Philadelphia, Seattle, Atlanta, and soon Nashville, Austin and Houston.

The company has grown exponentially since its founding in 2012. Its current valuation at $4.4 billion far exceeds other residential firms. Realogy, a conglomerate which owns Sotheby's International Realty, Coldwell Banker and the Corcoran Group, has a market cap of $2.5 billion. Compass is expected to hit $35.6 billion in sales volume this year, up from $14.8 billion in 2017. They are further projecting $1 billion in 2018 revenue up from $370 million in 2017. The company now has more than 7,000 agents on the ground, three times the number it has in 2017.

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"Compass's continued growth is being driven by their commitment to empowering agents with best-in-class technology that helps them expand their business and better serve consumers," said Justin Wilson, SoftBank Investment Adviser's board representative. We're excited to continue to support Compass as they further invest in their data and technology capabilities to create a next generation platform for home transactions and ownership."

The latest funding brings the total raised by Compass to $1.2 billion. In addition to international expansion, the company is looking to enter related businesses beside property listings, including mortgage title transfer and moving, Reffkin explained in a June interview. "What books were from Amazon, the brokerage model is for us."

Following the interview, Reffkin remarked to Compass that "It is because of your hard work, your ability to dream big, and your commitment to each other that we are fortunate to have this opportunity."

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