Brazil's Loft Valuation Soars: $700M Increase in One Month

Loft Secures Additional Funding, Boosting Valuation to $2.9 Billion

Just under a month ago, the digital real estate platform Loft announced the completion of a $425 million Series D funding round, spearheaded by D1 Capital Partners of New York. The investment round saw contributions from both new and existing investors, including DST, Tiger Global, Andreessen Horowitz, Fifth Wall, and QED, among others.

Valuation Surge

At that time, Loft’s valuation reached $2.2 billion, representing substantial growth from its near-unicorn status in January 2020. This funding round was one of the largest ever secured by a Brazilian startup.

Today, São Paulo-based Loft has announced an extension to this round, successfully raising an additional $100 million. This extension elevates the company’s valuation to $2.9 billion. Consequently, the 3-year-old startup has experienced a valuation increase of $700 million within weeks.

Series D-2 Round Details

Baillie Gifford led the Series D-2 round, with further participation from Tarsadia Capital, Flight Deck, Caffeinated, and other investors. Individual contributions were also received from founders of companies like Better (Zach Frenkel), GoPuff, Instacart, Kavak, and Sweetgreen.

A Comprehensive Real Estate Solution

Loft has achieved considerable success in its mission to function as a comprehensive resource for Brazilians navigating the complexities of home buying and selling.

In 2020, the number of property listings on the platform increased by a factor of “10 to 15,” as stated by co-founder and co-CEO Mate Pencz. Currently, the company actively manages over 13,000 property listings across approximately 130 regions within São Paulo and Rio de Janeiro, collaborating with more than 30,000 brokers.

Growth and Market Trends

More individuals are now receptive to conducting real estate transactions digitally, and there's a growing preference for homeownership over renting within the country.

“We achieved more than 6x year-over-year growth with numerous transactions throughout 2020,” Pencz revealed to TechCrunch during the previous funding round. “We are now expanding into the tens of thousands, and soon hundreds of thousands, of active listings.”

Rationale for Additional Capital

The decision to seek further funding was driven by several factors. Loft received “overwhelming investor interest” even after a highly competitive initial round, according to Pencz.

“We have observed continued acceleration in our market share growth, particularly in São Paulo and Rio de Janeiro, the two markets where we currently operate,” he explained. “An opportunity arose to accelerate growth further with additional capital was identified.”

Pencz also noted that Baillie Gifford’s substantial minimum investment requirements prompted the extension to be conducted at a higher valuation, increasing the overall round size to accommodate their participation.

Financial Performance

While the company has been less forthcoming with detailed financial information recently, it previously reported exceeding $150 million in annualized revenues during its first full year of operation, facilitated by over 1,000 transactions.

According to Pencz, the company’s revenues and GMV (gross merchandise value) “increased significantly” in 2020, though specific figures were not disclosed. He indicated that these figures are “multiples higher” than before, and that Loft is on a “very clear horizon to profitability.”

Company Background and Vision

Founded in early 2018 by Pencz and Florian Hagenbuch, who currently serve as co-CEOs, Loft aims to “bring Latin American real estate into the e-commerce age by developing online alternatives to analogue legacy processes and leveraging data to create transparency in highly opaque markets.” Pencz identifies Zillow as the U.S. real estate tech company with the most comparable model.

Building a Comprehensive Database

Unlike the United States, where MLSs (Multiple Listing Services) provide centralized property databases, Loft invested significant resources over several years to create its own databases for the Brazilian market.

Beyond facilitating home buying and selling, the platform offers related services such as insurance, renovations, and rentals.

Expansion into Mortgage Origination

In 2020, Loft expanded into the mortgage business through the acquisition of a leading mortgage brokerage in Brazil. The startup now ranks among the top three mortgage originators in the country, as per Pencz. He compares Loft’s mortgage application process to that of U.S.-based Better.com.

This latest funding round brings Loft’s total funding raised to $800 million. Additional investors include Brazil’s Canary and prominent angel investors such as Max Levchin of Affirm and PayPal, Palantir co-founder Joe Lonsdale, Instagram co-founder Mike Krieger, and David Vélez, CEO and founder of Brazilian fintech Nubank. Furthermore, Loft has secured over $100 million in debt financing through publicly listed real estate funds.

Future Plans

Loft intends to utilize the new capital to expand its operations throughout Brazil and eventually into Latin America and beyond. The company is also actively exploring potential M&A (mergers and acquisitions) opportunities.

This article was updated after publication to ensure accurate investor details.