Redfin Raises $50 Million Led by Tiger, T. Rowe PricePui-Wing Tam
Redfin Corp., an online real-estate brokerage, raised $50 million in a financing round led by Tiger Global Management LLC and T. Rowe Price Group Inc., the latest mature startup to get capital from big institutional investors.
The investment brings the company’s total funding to $95.7 million, said Chief Executive Officer Glenn Kelman, with early backers such as Greylock Partners and Globespan Capital Partners also participating. He declined to comment on Redfin’s valuation, which was less than $500 million in 2011.
The funding underscores the march of financial institutions, including mutual-fund companies like T. Rowe Price, into private technology companies with more developed businesses that want to wait before selling shares to the public. T. Rowe Price last month invested in online database-software maker MongoDB Inc. and Tiger Global last month put money into neighborhood social-networking site Nextdoor.com Inc.
“The money gives us more flexibility,” Kelman, who founded Seattle-based Redfin in 2004, said in an interview. “It’s encouraging that investors of this caliber want to invest in the business.”
Online real-estate sites Zillow Inc. and Trulia Inc. have gone public in the past two and a half years. Kelman told Bloomberg News in 2012 that “we expect to be public in 2014.”
In the interview this week, the CEO said the new capital doesn’t replace going public. While he isn’t sure when Redfin will hold an IPO, he said there is “no way this company is likely to get bought. We have a clear shot at the title and we’re going to take it.”
Redfin uses its website to generate leads for home buyers and also employs teams of salaried sales agents to complete a sale. The company, which operates in 22 markets in the U.S. and employs about 500 people, is seeing sales accelerate in its listings business and projects revenue growth of more than 50 percent, with an annual revenue run rate of $100 million, Kelman said.
Kelman said he plans to use the money to expand into new markets and hire employees. Redfin is also working on other initiatives that will cover a consumer’s real-estate experience more comprehensively, he said. He declined to provide details.
“Redfin is reinventing the process of buying or selling a home,” Henry Ellenbogen, portfolio manager for T. Rowe Price’s New Horizons Fund, said in a statement. “We invest in companies that have the opportunity to grow.”