July 21 (Bloomberg) -- Urban Compass Inc., the New York marketplace for renting and buying apartments, will expand to more U.S. cities after raising $40 million from investors.
Financing from Advance Publications Inc., Marc Benioff and other investors more than doubles the startup’s valuation to more than $360 million, 10 months after its last funding round, people with knowledge of the matter said. The company’s revenue has jumped 10-fold in the past year, said the people, who asked not to be identified because the information isn’t public.
Urban Compass lists properties with photos and employs real-estate agents to connect people with apartments. Users can tailor options and neighborhoods with more specificity than Craigslist, while brokers can manage relationships with clients using a mobile application. Urban Compass plans to introduce services in cities such as Boston, Chicago and San Francisco, according to Ori Allon, co-founder and executive chairman.
“A lot of people complain that there is a lot of dishonesty in the industry, that it’s very hard to trust what you see online, and with Urban Compass we bring more transparency,” Allon said. “Now we want to bring that nationally.”
The company has been able to expand rapidly and raise funding thanks to the background of its founders. Allon has sold companies to Google Inc. and Twitter Inc., while Urban Compass Chief Executive Officer Robert Reffkin was previously chief of staff for Goldman Sachs Group Inc. President Gary Cohn, after working in the firm’s private-equity arm for five years. Reffkin also started a philanthropic organization in New York, which helped connect Urban Compass with some of its investors.
Urban Compass’s latest funding round also includes investments from Thrive Capital, Founders Fund, .406 Ventures and American Express Co. CEO Kenneth Chenault.
The deal comes as several Web startups have raised money at multiples of previous fundings. In May, Pinterest Inc., which lets users curate images, got financing at a $5 billion valuation, up from $3.8 billion months before, while Uber Inc. raised funds at a valuation of $17 billion, compared with $3.5 billion last year. Allon says his company’s valuation is based on clear metrics.
“It’s not like we’re making the latest craze,” Allon said. “We’re building a healthy, strong business with real revenue and are raising the money because we need real investment in the cities.”
The company employs more than 130 people and plans to add staff after moving to a space near Union Square with 9,000 more square feet. Brokers make up more than half of the staff and they use software developed by Urban Compass to manage relationships with clients. Allon says he hopes to have more than 200 brokers nationwide within a year.
Once people are settled into their new homes, the founders will seek to connect them to a network of local goods and services. Still, expansion comes first, Allon said.
“We’re working on it and we know it will be especially successful once we get to critical mass in every city,” Allon said.
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