SoftBank Invests in Pacaso: $125M Series C Funding

Pacaso Secures $125 Million, Reaching $1.5 Billion Valuation

Just under six months after a $75 million funding round, Pacaso – a real estate platform facilitating shared second home ownership – has announced a new investment of $125 million. This latest round values the company at $1.5 billion.

Series C Funding Details

SoftBank Vision Fund 2 spearheaded the Series C funding for Pacaso. The company rapidly transitioned from launch to a "unicorn" status within five months earlier this year, and its name is pronounced similarly to Picasso.

Additional investors included Fifth Wall and Gaingels, alongside existing backers such as Greycroft, Global Founders Capital, Crosscut, and 75 & Sunny Ventures. Notably, Sunny Ventures is the venture firm of Pacaso co-founder Spencer Rascoff.

To date, Pacaso has accumulated $215 million in equity funding since its establishment in 2020. Furthermore, the company secured $1 billion in debt financing earlier in the year.

Rapid Growth and Performance

Pacaso launched its platform in October of the previous year and has already achieved an annualized revenue run rate of $330 million, according to CEO and co-founder Austin Allison. This growth is considered remarkably swift.

Currently, the company manages approximately $200 million in real estate assets. Website and mobile app traffic combined reached 1.8 million visits in the second quarter, representing a 196% increase from the first quarter.

The platform currently serves "hundreds" of homeowners.

Origins and Co-Ownership Model

The concept for Pacaso originated with former Zillow executives Allison and Rascoff, following their departure from Zillow approximately two years ago. Zillow, a publicly traded company, currently boasts a market capitalization of $24 billion.

Pacaso’s unique co-ownership model utilizes property-specific LLCs to lower the costs and complexities associated with second home ownership. It also provides an alternative to traditional vacation rental arrangements.

Distinction from Timeshares

The Pacaso model differs significantly from traditional timeshares, which grant the right to use a property for a fixed period. Instead, Pacaso connects small groups of co-owners to purchase shares in a single-family home, allowing for year-round access.

How Pacaso Operates

Pacaso either purchases homes directly or acquires shares in existing properties. The company then collaborates with local real estate agents to market these properties.

Shares in the homes are then sold, ranging from one-eighth ownership to a larger percentage.

Market Presence and Expansion

Pacaso holds brokerage licenses in around 25 popular second home destinations, including Napa, Lake Tahoe, Palm Springs, Malibu, and Park City. The company recently expanded internationally with its first market in Spain.

Buyers can explore curated listings on the startup’s website, featuring both active properties and previews of homes being considered for purchase based on buyer demand.

Integrated Services

Beyond listing properties, Pacaso offers integrated financing options, high-end interior design services, professional property management, and a proprietary scheduling system.

Team Growth

In January, Pacaso employed 30 individuals. Today, the team has grown to over 120 employees, according to Allison.

Target Market

While Pacaso aims to eventually make homeownership accessible to a wider audience, Allison acknowledges that the current offerings primarily consist of luxury or higher-priced homes.

Currently, 65% of Pacaso’s customers are first-time second homeowners, and 30% identify as non-white or LGBTQ.

SoftBank’s Perspective

Lydia Jett, a SoftBank Investing Partner, expressed her enthusiasm for Pacaso, citing both professional and personal reasons.

Jett shared that her family previously co-owned a modest beach house in Oregon, an experience that highlighted the challenges of shared property ownership.

She described the difficulties associated with scheduling, capital investments, and resolving disputes when a co-owner sought to sell their share.

Jett believes that Pacaso addresses many of these pain points by streamlining the co-ownership process, alleviating the burdens of maintenance, furnishings, and vacation scheduling.

Allison explained that Pacaso’s “SmartStay” scheduling solution ensures equitable access to the property for all co-owners throughout the year.

Jett views Pacaso as an intermediary that simplifies co-ownership, making it a highly appealing model.

SoftBank was also attracted by the opportunity to establish a new category within the home ownership market.

Jett stated that Pacaso has the potential to significantly improve the lives of millions by making co-ownership a reality.

Competitive Landscape

Last month, TechCrunch reported on a $56 million debt and equity raise by Kocomo, a Mexico City-based startup with a similar mission and model to Pacaso. However, Kocomo focuses on enabling cross-border co-ownership of luxury vacation properties.