Knock Explores Potential Public Offering

Another company operating within the property technology (proptech) sector is evaluating the possibility of raising capital through a public offering.

Knock officially confirmed on Monday that it is exploring options for becoming a publicly traded company. However, CEO Sean Black indicated that the specific method – whether a traditional Initial Public Offering (IPO), a Special Purpose Acquisition Company (SPAC) merger, or a direct listing – remains undecided.

Strategic Objectives

“We are evaluating all available avenues,” Black stated to TechCrunch. “Having spearheaded the transformation of real estate transactions over the past five years, our primary focus is to secure funding that will significantly expand our lead over competitors and those offering less innovative solutions.”

Bloomberg reported earlier today that Knock has engaged Goldman Sachs to provide advisory services regarding this potential undertaking, a detail that Knock has also verified.

Potential IPO Details

Sources cited by Bloomberg suggest that Knock may be aiming to raise between $400 million and $500 million through an IPO, potentially achieving a valuation of approximately $2 billion. The company has declined to comment on the accuracy of this valuation.

Founding Team's Experience

Both Sean Black and Jamie Glenn, Knock’s Chief Operating Officer, possess extensive experience in the proptech industry. They were both integral members of the founding team at Trulia, which successfully went public in 2012 and was subsequently acquired by Zillow for $3.5 billion in 2014.

The pair established Knock in 2015, and have since secured over $430 million in venture capital funding, alongside an additional $170 million in debt financing.

Evolution of Knock’s Business Model

Knock initially functioned as a real estate brokerage. However, in July of the previous year, the company announced a significant strategic shift, transitioning into a lending institution.

At that time, Knock introduced its Home Swap program. This program enables Knock to act as the lender, assisting homeowners in purchasing a new property before selling their existing residence. Previously, the company collaborated with lending partners, but has now obtained its own lending license.

Integrated Financing Solutions

Currently, the company provides comprehensive financing solutions – encompassing both a mortgage and an interest-free bridge loan – designed to empower consumers to submit competitive, non-contingent offers on new homes. This is achieved before the preparation and listing of their current home for sale on the open market.

This transition led to the discontinuation of Knock’s Home Trade-In program. This earlier program involved Knock utilizing its own funds to acquire a new home on behalf of the consumer, prior to preparing and listing the consumer’s existing property. The homeowner would then use the proceeds from the sale of their old home to repurchase the new home from Knock, covering any repair costs incurred by the company.

Rationale Behind the Strategic Shift

Black previously explained that the decision to move away from the trade-in program was partly due to its substantial capital requirements and the necessity of completing two separate property closings.

“It introduced unnecessary complexity into the process,” he noted. “Especially during the COVID-19 pandemic, coordinating the simultaneous sale and purchase of a home proved challenging. Our aim is to facilitate transactions that are otherwise unattainable through conventional lending methods. We are able to provide financing before a homeowner’s property is even listed for sale.”

Knock’s Current Value Proposition

Black summarized Knock’s current offering as a complete technology platform that encompasses all aspects of the home buying process. This includes pre-funding for homebuyers to submit strong offers, managing home preparation with a network of contractors, facilitating a quick sale at the best possible price, and providing access to a dedicated agent through the app.

He added that demand for the Home Swap program has “surpassed all projections.”

Geographic Expansion and Growth

Knock maintains its headquarters in both New York and San Francisco. The Home Swap program was initially launched in three markets in July 2020, and has since expanded to 27 markets across nine states, including Texas, California, and North Carolina.

“Our initial goal was to operate in 21 markets by the end of 2021,” Black stated. “Given our current growth trajectory, we anticipate reaching 45 markets by year-end and expanding to 100 markets by 2023.”

The company began 2021 with a workforce of 100 employees and has since grown to 150. Plans are in place to increase the employee count to at least 400 by the end of the year.

Other Proptech Companies Pursuing Public Offerings

Other proptech startups that have recently announced plans to go public include Compass and Doma (formerly States Title).