Tech-focused brokerage Redfin has just nabbed a pot of cash larger than all the money it’s raised since its founding nine years ago — an investment that CEO Glenn Kelman acknowledges is viewed as setting the company up for an initial public offering.
The “mezzanine investment” of $50 million, which Redfin said it will use on new technology, was led by Tiger Global Management LLC and by portfolios managed by T. Rowe Price Associates Inc.
Five previous Redfin investors — Greylock Partners, Globespan Capital Partners, DFJ Venture Capital, Vulcan Capital and The Hillman Company — also participated. Austin Ligon, co-founder and former CEO of CarMax, and Redfin board director, chipped in, too.
Before the latest round of financing, Redfin had raised a total of $45.7 million in venture capital.
“T. Rowe Price and Tiger Global see opportunities over 10-year time frames, building positions in companies as they grow from private businesses into industry leaders,” Kelman said in a statement. “We are delighted to have found partners who support our mission to make real estate better for consumers, not just ourselves, because this is the only way we know of to build a business for the ages.”
The funding round reportedly values Redfin at around $500 million, and in an interview with Fortune, Kelman did not dispute perceptions that this round of financing is seen as paving the way for an IPO.
Redfin, which serves 22 major U.S. markets, used the announcement of the funding round to call attention to the following milestones that it’s reached:
- Annual revenue growth of more than 50 percent.
- Increase of more than 100 percent in home-selling transactions.
- More than $175 million in customer savings on real estate fees.
- More than $13 billion in home sales.
- Expansion to five major markets in 2013, including Houston, Charlotte and Miami.
- New groundbreaking technology like Redfin Price Whisperer, Redfin Matchmaker, Home Value Tool and Redfin School Search.
- Industry-leading customer satisfaction, with 97 percent of Redfin clients willing to recommend Redfin to a friend.
Redfin has made waves in the real estate industry since it debuted in 2004. Though originally just a site that offered map-based listing search, Redfin later hired agents to supplement its search technology with a human touch. In doing so, it forged a business model that has inspired a number of other tech-geared brokers.
Unlike many traditional brokerages, Redfin offers its agents salaries, benefits, leads, and a basket of devices and tools. It also pays its agents bonuses based on customer satisfaction and offers rebates to buyers who use Redfin agents.
Redfin has aggressively expanded in the last year, setting up shop in at least five new major markets and relentlessly rolling out new tools.
So far this year, Redfin has set up operations in Miami, Fort Lauderdale and West Palm Beach in South Florida; Houston, Texas; New York City’s Bronx borough; Raleigh and Charlotte in North Carolina; and the Corona, Murrieta, Temecula and Chino areas of California’s Inland Empire region.
Just yesterday, it launched Redfin Builder Services, a custom listing service for homebuilders. Other tools it introduced this year include “Redfin Matchmaker,” a service that recommends listings to a buyer based on the buyer’s online activity and the approval or disapproval of the agent’s buyer, and its “Price Whisperer,” a tool that tests a listing price’s competitiveness for a seller by polling buyers.
