Redfin Adds $14.8M to Expand Online Real Estate Brokerage to New Markets
[Updated 12:20 pm Pacific with correction]
Redfin, the Seattle-based online real estate brokerage, says it has raised $14.8 million led by new investor Globespan Capital Partners. Redfin says the new round of financing, which pushes its total venture tally to about $46 million, will be used for R&D spending and expansion into new markets. At present, the company operates in about 20 individually listed markets, including Chicago, Dallas, L.A., and Long Island in New York.
Previous investors were back for the new round, including Seattle’s Madrona Venture Group and Vulcan Capital, Draper Fisher Jurvetson, and Greylock Partners. Globespan managing director Venky Ganesan is joining the Redfin board as part of the deal.
Redfin takes a different approach to the online real-estate market than Seattle’s Zillow (NASDAQ: Z). In Zillow’s case, it makes money from online advertising, professional subscriptions, and per-click fees charged to lenders who offer online mortgage quotes. Redfin is more like a traditional real-estate business model, making varying amounts of money on home sales, but offering discounts over typical commissions. Redfin has its own agents, but also partners with brokers around the country. Redfin says it also gets a cut of any lender fees generated by users it sends through Zillow’s Mortgage Marketplace. [This paragraph has been updated to correct references to the kind of fees charged in the Zillow Mortgage Marketplace.]
Although the housing meltdown was clearly a bad time for anyone involved in the real estate sector—and, basically, everyone else—Redfin appeared to have bounced back nicely as of last year, when CEO Glenn Kelman told TechCrunch that the company was on pace for a $30 million revenue year. Redfin had previously said it was profitable at a run rate about half that size.
Zillow, of course, went public earlier this year—the only Seattle-area tech company to pull off an IPO while the window was seen as open. GeekWire’s John Cook says Redfin has been discussed as a possible IPO candidate, but that’s apparently not immediately in the cards.