Redfin raises $50 million from Tiger Global, T. Rowe Price
SAN FRANCISCO Nov 13 (Reuters) - Online real estate company Redfin said it has raised $50 million from investment companies Tiger Global Management and T. Rowe Price Associates, making it the latest venture capital-backed company to look to nontraditional backers for venture funding.
The Seattle-based company, which announced the new funding on Wednesday, aims to cut costs to homebuyers by awarding to them a portion of real-estate fees that agents traditionally are paid by homesellers. If representing the sellers, it cuts fees charged to them. But it has struggled to win significant market share in the 22 cities where it operates.
But the cash investors have poured into the business indicates they think Redfin's model will catch on as house prices soar. Some $50 billion a year is spent on U.S. real estate fees, which are tied to home prices, a spokeswoman said.
Raising the funds also means that Redfin, often cited as a promising candidate for an initial public offering, likely will not tap public markets anytime soon.
"We view the later-stage funding with firms like Tiger Global and T. Rowe as a good way to begin relationships with public-company investors and learn how they evaluate Redfin," spokeswoman Jani Strand said. She declined to comment on the timing of an IPO.
Increasing numbers of traditional hedge funds and late-stage investors are backing companies at early stages traditionally reserved for venture capital.
Mutual fund company T. Rowe Price invested in companies such as Twitter and Facebook before they went public.
Tiger Global, known for its hedge fund and private equity investments, last month invested $60 million in Nextdoor, an online social network for neighbors.
In May, it invested $50 million in Automattic, the company behind the WordPress blogging service, shortly after leading a $60 million financing round for online ticketing service Eventbrite. In January, Tiger led a $444 million equity investment in online survey company SurveyMonkey.
Before the latest financing round Redfin had raised $45.7 million in venture capital from investors including Greylock Partners, Globespan Capital Partners, DFJ Venture Capital and others. Its last fundraising was a $14.8 million round in 2011.
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