Seattle-based Redfin announced a mezzanine investment of $50 million led by Tiger Global Management LLC and by portfolios managed by T. Rowe Price Associates, Inc. Previous Redfin investors Greylock Partners, Globespan Capital Partners, DFJ Venture Capital, Vulcan Capital and The Hillman Company are also participating.
Redfin has said it intends to use the capital on new technology to make every step of home-buying and selling better for consumers, from the open house to the tour to the offer, negotiation and escrow process.
“Redfin’s devotion to the customer was apparent from our first meeting with the company,” said Lee Fixel, Tiger Global partner. “The real estate industry is ready for an innovator who understands how business can be transformed by putting the customer first, as we’ve seen with many industries before. We are confident this strategy will create significant value for all stakeholders over the long term.”
“Redfin is reinventing the process of buying or selling a home,” said Henry Ellenbogen, portfolio manager for T. Rowe Price’sNew Horizons Fund. “We invest in companies that have the opportunity to grow. We believe Redfin has the real-world service, management team and vision to be much larger.”
“T. Rowe Price and Tiger Global see opportunities over ten-year time-frames, building positions in companies as they grow from private businesses into industry leaders,” said Redfin CEO Glenn Kelman. “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.”
Austin Ligon, co-founder and former CEO of CarMax and Redfin board director, also took part in this financing. Prior to this financing, Redfin had raised $45.7 million in venture capital.
Redfin is a leader in an emerging category of software companies that also offer real-world goods and services. The company’s combination of technology and service benefits consumers on three fronts:
- Technology: Redfin invented map-based real estate search, then built technology to make every step of buying or selling a home better, from on-the-spot tour-scheduling to an online deal room to a targeted digital campaign for each listing.
- Advocacy: Redfin’s on-demand service model takes the pressure out of working with its agents, who earn a bonus based not on the sale, but on the customer’s satisfaction with the sale. Redfin agents fight to get customers a good deal but also tell customers when to walk away from a bad one too.
- Value: because technology frees Redfin agents to spend their time serving — not searching for — clients, the company can deliver 97 percent customer satisfaction and an average savings of $10,000 in fees for a customer who buys and sells with Redfin. The company refunds up to half of the buyer’s agent fee, and saves a typical listing client 1.5 percent of the home value.
Edited by Gordana Davila