housing
On Wednesday, the Culver City-based startup will publicly launch a $5 million campaign on the crowdfunding platform Republic, with the goal of raising new funds to increase its supply inventory and grow its 12-person staff. Co-founder Gene Eidelman told dot.LA that Azure was bootstrapped until last week, when it received an undisclosed amount of funding from two angel investors.
“As unfortunate as the pandemic is, trying to serve customers during a pandemic is what led us to this idea,” Eidelman said.
Azure is the brainchild of Eidelman and his fellow co-founder and company CEO Ross Maguire. The construction industry vets (Eidelman previously worked for local home construction firm Houck Construction, while Maguire served as a construction manager for British giant Carillion) bonded over a passion for advancing sustainability in their chosen trade. The construction sector is one of the most energy-intensive industries in the world and responsible for 38% of global carbon emissions, according to a report last year by the World Business Council for Sustainable Development.
The pair launched Azure Construction in 2019, initially with the aim of building backyard additions and ADUs in a timely manner and with transparent pricing. But their interest in sustainability led them to the realm of 3D printing, which can be a significantly less resource-intensive method of construction. Maguire said they initially devoted their time to consulting with different 3D printing companies and figuring out which materials and printers they should use, as well as what the designs of their 3D-printed structures should look like. Azure Printed Homes was subsequently, officially born this April.
Azure's 3D printed ADU. Photo by Decerry Donato
The startup boasts that the materials used to 3D-print its structures are made of 60% recycled plastic, fiberglass, and an ultraviolet (UV) stabilizer that offers protection from the sun. A 120-square-foot studio starts at $24,000 (with the cost increasing with additional square footage), not including delivery fees and add-ons (such as solar panels and air conditioning) that can cost thousands of dollars more. Azure says that customers can expect the entire process—from their initial order to the final delivery and installation of the product—to take less than one week. The company is also using the crowdfunding campaign to unveil a new 180-square-foot ADU with a kitchenette for less than $40,000.
Most of the $5 million in crowdfunding that Azure is seeking will be allocated toward buying two more robotic printers to help boost its production capacity. Currently, the startup has one robot stationed at its factory that can print the walls of a 120-square-foot unit in less than 24 hours. By purchasing two more robots, the company will be able to produce three structures per day—a heightened pace that will help alleviate Azure’s current 40-order backlog and the roughly 70 inquiries, on average, that it receives from potential customers each day, according to Maguire.
“The beauty of it seems to be that some people just love the way it looks,” Maguire told dot.LA. “But then there’s enthusiasts about the environmental aspect, and then people that love the technology of 3D printing.”
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.
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