| SAN FRANCISCO
SAN FRANCISCO Nov 13 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.