housing
The latest round values Pacaso at $1.5 billion, up from the $1 billion valuation the real estate tech startup hit in March. Softbank led the deal, with participation from other firms including Greycroft, Crosscut, Fifth Wall, Global Founders Capital, LGBTQ-focused syndicate Gaingels, and Rascoff's fund, 75 and Sunny. Rascoff also co-founded this very website, along with Hotwire.com.
Since it launched just shy of a year ago, Pacaso has raised more than $215 million. The funds have fueled its expansion into 25 destinations, such as Miami and Aspen. Next up, the firm is charting a path into Europe, starting with Spain later this year.
"In January, we were about 30 people. Today we're well over 120 people," Allison told dot.LA, adding that in the last quarter 2 million people visited the company's website. "Our annualized revenue run rate is now north of $330 million, and that's from zero one year ago." Allison declined to share the number of homes Pacaso has sold to date and estimates Pacaso's customer base is "in the hundreds."
Pacaso's debut coincided with a second-home market boom, as white-collar workers seized on pandemic-era remote work policies and friendly mortgage rates. But amid its growth, the startup has drawn ire from many newfound neighbors, who argue the company is building a "glorified timeshare" business in their community.
A petition against Pacaso's presence in Sonoma neighborhoods, known for their elaborate vineyards, has garnered 2,969 signatures. Its organizers, Stop Pacaso Now, call the startup "the newest way for Silicon Valley bros and venture capital vultures to make a quick buck at your expense." The group warns, "You may not realize the house next door sold to Pacaso until you see a revolving cast of guests pulling up every couple of days or weeks."
Stop Pacaso Now did not respond to dot.LA's request for comment.
Pacaso says it offers "anything but" timeshares, and it's currently waging a legal fight over local timeshare rules in California's wine country. St. Helena City Attorney Ethan Walsh cautioned Pacaso in February that "it appears to be operating, facilitating, and selling timeshares under state law and the City's code." He added, "Simply calling them co-ownership arrangements does not change that fact."
Allison says that Pacaso empowers "more people to realize their second-home dream," while filling properties that would otherwise sit unoccupied for most of the year.
"We're consolidating demand. We're taking second-home owners who would otherwise be competing in the median tier and we're moving them into the luxury tier, right? It's better to have six or eight families owning one luxury second home than to have those same six or eight families buying up six or eight separate median-priced homes."
Allison says Pacaso will be good for neighborhoods and local businesses. Startups catering to vacationers such as Airbnb have driven up local rent prices and contributed to housing shortages, according to researchers at the University of Cologne. The neighbors fighting back argue their communities will experience a similar outcome.
Pacaso's founders, however, are so convinced their service is innovative that they baked the essence right into the name, evoking the legacy of experimental painter Pablo Picasso.
Pacaso is just one of many companies that have been launched by former Zillow staffers in recent years. They include Mill Valley-based Glassdoor, a site for posting employee reviews and candid assessments of current and former employers, and San Francisco-based Divvy Homes, which aims to convert renters into homeowners.
- Pacaso's CEO on Making Second Home Ownership More ... ›
- Shared Vacation Home Platform Pacaso Joins the Unicorn Club, Six ... ›
Prefabricated housing construction has exploded in recent years, as L.A. has looked to the dwelling style as a way of diversifying its housing supply and tackling the housing crisis.
Plant Prefab says its forthcoming third factory will allow the company to cut waste by up to 30% while saving 10% to 25% on cost and reducing construction times by 20% to 50% compared to traditional building methods.
Prefab also claims their homes are 30% better than the average home built in California in 2020 under Title 24 energy efficiency standards. Both new plants, including the one that opened last week in Ontario, California, will simply allow the company to do more volume, too. As the 94-person company closes in on completing its 100th building, founder and CEO Steve Glenn says their focus will remain on urban settings where the customization options offered by Plant Prefab make it an attractive option for developers building where space is at a premium and often irregular in shape. But before Plant Prefab got its start six years ago, Glenn says the combination of high quality, sustainable, and custom prefabricated homes wasn't the norm.
"If a company existed and it had the right technology and processes, we could solve the problems of hundreds of thousands of individuals and affordable housing nonprofits who need a better way to build, particularly for cities, which is where most custom projects were built," he said.
Prefabricated construction offers a number of advantages that makes it appealing for builders who are trying to reduce waste, save money and lessen the environmental impacts. Building in a factory rather than onsite eliminates variables like weather, allowing builders to work all year round without concern for rain or snow. Factories also allow for much greater precision and easier recycling.
"When you see a site-built house, there are dumpsters filled with debris. Most of that debris can be recycled in a factory. Drywall is recycled, the wood is recycled, metal is sent back to the metal workers," said Sheri Koones, an expert on prefabrication and author of "Downsize: Living Large in a Small House."
Koones also points out that when you're building indoors you don't have to worry about closing the structure up quickly, which allows for more careful application of insulation and energy savings over the lifetime of the house. Items like windows and flooring can be purchased in bulk and delivery trucks only need to make one stop, which burns less fuel than visiting multiple sites.
"[Plant Prefab] have always been very environmentally friendly and they've always looked for innovative ways to make their houses green," she said.
For Glenn, who had abandoned his childhood dreams of architecture in college and entered into the world of tech—prior to Plant Prefab, he was CEO of PeopleLink and a VR imagineer at Disney — the return to architecture, albeit on the business end, is a welcome one. After all, he explains, if he can't be an architect himself, he can still work as a developer and hire talented architects and "let them do great things."
And that experience in software has proven plenty valuable.
"I'm a big fan of a lean startup approach," he said. "It reflects something that software engineers learned in the '80s, which is if you spend too much time on design up front, it turns out you don't really know enough about the problem."
- These Granny Flat Designs Are Pre-Approved in LA - dot.LA ›
- Lennar's Stuart Miller: 'Evolve or Die' as Homes Go High-Tech - dot.LA ›
- How 3D Printing Could Help Tackle Homelessness in LA - dot.LA ›