Pacaso, the fast-growing second-home startup headed by a Cincinnati native, has raised a $125 million Series C, and one of the participating investment firms also has Queen City ties.
California-based Fifth Wall, a venture capital firm focused on global real estate technologies, headed by St. Xavier High School alumnus Brad Greiwe, is one of Pacaso’s newest backers as the 11-month-old company continues its meteoric rise.
The raise, announced Tuesday morning, brings the company’s total equity funding to more than $215 million and pushes Pacaso’s valuation to $1.5 billion. Pacaso, founded by Austin Allison, a Cincinnati native who founded and exited Dotloop, a real estate tech startup, to Zillow for $108 million in 2015, initially reached unicorn status in March, five months after its launch, making it the fastest startup in U.S. history to reach the benchmark $1 billion valuation.
Greiwe, who lives in San Fransisco, isn’t surprised by the company’s fast growth. He first met Allison during Allison's time at Zillow, and the Cincinnati connection helped seal the deal. Pacaso aims to makes second-home ownership more accessible by modernizing the generations-old practice of co-ownership. Greiwe called the second-home market a “white space of opportunity.”
“There’s not a better entrepreneur out there than Austin, and he and the team spent a lot of time understanding what the opportunity was and are well positioned to take advantage of it,” Greiwe told me. “I think Austin and the team will continue to surprise us at how fast they scale and how big they grow.”
The round, a Series C, was led by SoftBank Vision’s fund 2 with additional backing provided by Fifth Wall and Gaingels, an investment syndicate supporting diversity and increased representation of the LGBTQ+ community and allies.
The round also included participation from prior investors Greycroft, Global Founders Capital, Crosscut and 75 & Sunny Ventures.
Allison told me the funds will be earmarked for market expansion — Pacaso has hinted for months its plans to expand into Europe. Pacaso homes will be available in Spain by the end of the year, he said. The company has plans for other European markets as well as Mexico and the Caribbean shortly after, likely in the first part of 2022.
To support its global effort, Pacaso is actively recruiting a dedicated team in Spain. It has also named Canadian-native Razor Suleman president of Pacaso Global.
“Our mission is about making second-home ownership possible for more people. That’s a big mission opportunity, and in order to do that, we have to make Pacaso available in more markets,” Allison said.
Allison said Pacaso doesn’t count any one city as its HQ, but the startup will continue to scale its team in Cincinnati — one of its bigger hubs — as well as in other markets where it finds talent.
Pacaso has around a dozen employees in the Queen City, including one of its most recent hires, David Willbrand, a longtime partner at Thompson Hine, who joined as chief legal officer in April.
Unlike a timeshare, Pasaco buyers own property, not time. Buyers considering second-home ownership tell Pacaso where they want to buy, how much they want to spend and the amount of time they expect to be in the house. Pacaso and its real estate agent partners help find the home and set up an LLC designed for co-ownership. The buyer purchases their desired share — half the home, for example, guarantees access to the home for half the year — and Pacaso briefly purchases the remainder of the home before reselling the remaining portion to vetted buyers.
Pacaso manages the property, and owners can use Pacaso’s mobile app for scheduling stays. Buyers pay a service fee at the time of purchase and a property management fee each year.
"The business model is now proven,” said Greiwe. “The way they’ve positioned the business, hired and staffed it, positioned it and the experience they’ve been able to deliver to customers, that all has a snowball effect. Now it’s a function of how quickly and how responsibly they can grow and capture the market demand.”
Consumer interest continues to grow, and there’s been even more pent-up demand driven by the pandemic people continue to work remote.
The company has doubled its domestic market reach and now operates in 25 second-home destinations, including Napa, Lake Tahoe, Aspen, Malibu, Miami and Vail.
Pacaso has an annualized revenue run rate of $330 million and manages nearly $200 million in real estate on its platform, marking the first time the company has released such figures.
In the second quarter, its website and mobile app saw 1.8 million visits, growth of 196% over quarter one.
Allison said 60% of Pacaso buyers are first-time second-home owners.
“We continue to grow at an incredible pace, which is a testament to our team, the resonance of co-ownership, and the company’s ability to provide a modern and more sustainable way to own real estate in second home destinations," he said.
