SEATTLE, WA -- With a generation of consumers accustomed to shopping on the Internet now entering home-buying age, Redfin Corp. is betting on a shake-up of the traditional real estate model and raised a $12 million round to drive potential buyers to its Web site.
The Series C financing was led by new investor Draper Fisher Jurvetson. Previous shareholders Madrona Venture Group, Vulcan Capital, BEV Capital and The Hillman Company also participated. Redfin has raised $20.8 million to date. As part of the funding, DFJ partner Emily Melton will join Redfin's board of directors.
Chief Executive Glenn Kelman said the funding will help launch the company's online real estate service in the Washington, D.C., and Baltimore areas. The additions bring the number of markets the company has entered to eight, with plans to add Chicago and Sacramento to the list in coming months. "The future is always uncertain with start-ups, but I think a significant amount of Americans are going to be buying homes online," Kelman said. "We are a Web site to guide people through the whole process of buying a house."
Through its Web site, Redfin allows consumers to locate real estate listings on an aerial map, viewing property information such as square footage, the current asking price, and the layout. A user can also view tax records showing how much the house sold for in the past. Founded in 2004, Redfin contracts agents in the area to show the house and pays them a bonus once the house sells. Kelman said the new approach to real estate listing is not popular among traditional realtors who see potential customers doing more of the research on their own. "Part of the risk in this investment is we are rocking the boat a little bit," Kelman said. "Change is good, but it's more risky."
Melton said DFJ considered investing in the company's previous round, but wanted to a see a little more proof of concept. "It's good when you have a company come pitch you and then you continue to see the progress," Melton said. "Glenn under promised and over delivered. It was good to see their model was working and revenue was more than expected."
Kelman said the Seattle-based company had revenue of $1 million in 2006 and more in the last quarter than all of last year. He expects the company to be break-even in 2008 and become profitable in 2009.
For more information on Redfin, visit: www.redfin.com.
Back to more announcements