Pacaso is a marketplace for second homes that has raised $75m in Series B financing. This gives Pacaso’s five-month-old company a valuation of over $1 billion.
Pacaso was founded in 2008 by Austin Allison, CEO, and Spencer Rascoff (Zillow co-founder). The company has raised more than $90 million. The company specializes in the subdividing of vacation homes between multiple owners. In most cases, they buy them upfront and manage their use. Existing homeowners can also use the platform to sell a portion of their property.
According to Allison, 35, “There are tens to millions of families who want to own second homes, but cannot, because of reasons of cost.” He sold his first realty startup, dotloop, to Zillow in 2015. Or, in some cases, they can afford the second home but can’t justify buying 100% of something they only use 10% of the day.
Pacaso refused to disclose financial numbers, including revenue. Instead, Pacaso’s press release focuses on the number and potential customers who have inquired about its services (500,000) and its website visitors (500,000). Greycroft Partners and Global Founders Capital led the round. According to the startup, it also secured $1 billion in debt funding.
For a young company, such a high valuation is difficult to comprehend. Greycroft founder Dana Settle acknowledges the difficulty of valuing fast-growing companies. Still, she says that “everything [Pacaso] hits the key points that we look at in an investment. . . . This doesn’t require you to be in a significant market share to make it a big company.
Pacaso currently operates in 12 markets. It plans to expand further in the next eight months using new capital to accelerate growth. The company charges a 12% purchase fee and $100 per month to each owner.
Allison insists that this business model is different from time-share companies, which typically sell partial ownership in resort property. It’s the most similar to co-ownership by doing it yourself, which happens all the time. He says that this is where two friends or relatives decide to buy a house together.
He also said that Pacaso could cater to different real estate assets than time-shares and offer various services. He says, “We manage everything from the formation of the LLC to the finding of properties in many cases to the aggregation of the group co-owners.” We also handle every detail: we pay all bills, coordinate cleaning crews, coordinate handymen for repairs.
Covid has led to a surge in demand for second homes. Many city dwellers are particularly eager for more space. “Prices have skyrocketed,” states Melissa Cohn ( executive mortgage banker, William Raveis Mortgage). “Places such as Florida and Hamptons have seen an explosion in sales, with many houses going on the market the same day and offering multiple offers.”