Brazilian Home-Selling Startup Loft Eyes $2.8 Billion Valuation
The company has raised $425 million from a wide group of global investors in a new round; it plans to follow that quickly with an additional financing at a higher valuation
Brazilian real-estate startup Loft Holdings Ltd. is riding a booming local home-buying market, helping it attract new capital.
The São Paulo-based company raised $425 million at a valuation of $2.2 billion in a Series D round just three years after its launch.
D1 Capital Partners, a hedge fund that has been building a large private portfolio, led the deal, with participation from an array of global investors.
Loft is already in the process of raising about $100 million more in an add-on to the deal that would boost its valuation to roughly $2.8 billion post-money, according to people familiar with the situation.
The investment in Loft comes at a time when venture investors are paying more attention to startups in Latin America. Overall, Latin American startups completed 488 venture rounds last year, up from 433 in 2019, according to preliminary data from Emerging Markets Private Equity Association, a New York-based industry association.
“VC-backed or tech companies, in general, are leapfrogging and growing faster here than even in the U.S.,” said Mate Pencz, Loft’s founder and co-chief executive.
Part of the reason, he said, is that incumbent industry players in the region tend to be less digitally savvy and charge higher fees, making startup offerings more attractive to consumers. There are also fewer startup competitors. Mr. Pencz said Loft is the dominant digital “iBuyer,” a type of home flipper, in Brazil.
At the same time, there are fewer regulatory roadblocks to deploying technology in a user-friendly way, he said. Loft, for example, has been completing the majority of its mortgage closings and home sales fully digitally.
Several investors participating in the Series D financing are making their first foray into Latin America or are returning after a long absence, Mr. Pencz said
New investors in the round include Advent International, Altimeter Capital Management, Canada Pension Plan Investment Board, DST Global, Singapore’s sovereign wealth fund GIC, Silver Lake Waterman, Soros Fund Management, Tarsadia Capital and Tiger Global Management. Returning investors include Andreessen Horowitz, Caffeinated Capital, Fifth Wall, Monashees, QED Investors and Vulcan Capital. Loft’s Series C round took place more than a year ago, and totaled $175 million.
Mr. Pencz co-founded Loft with co-CEO Florian Hagenbuch. The duo previously started Brazil-based Printi, an online printing service.
Mr. Pencz said Loft exceeded its financial projections in 2020, which spurred the Series D round. He also wanted to involve investors that participate in both private and public markets to help the company when it decides to go public.
The company’s business has been booming in Brazil despite the country’s tough economic situation.
“Mortgage rates are at all-time lows, which is bringing a lot more affordability into the real-estate market,” Mr. Pencz said.
New real-estate loans in Brazil hit a five-year high recently as interest rates are at record lows, according to a research report from financial services company Banco Santander. At the same time home prices are up, the report showed.
Loft also has an online real-estate marketplace, where people list their homes and Loft facilitates the sale, making a brokerage commission. In addition, the company makes money by originating mortgages and selling other related services.
The company now has about 15,000 homes on its platform, mostly apartments in São Paulo and Rio de Janeiro, up from roughly 1,000 in early 2020. Mr. Pencz declined to comment on the company’s financial metrics.
While Brazil has suffered economically over the past year and has a long history of currency depreciation and political instability, Mr. Pencz said that his business shows how tech startups in the country can continue growing even through volatile times.
“We started the business in the middle of a recession. We never left that recession,” but that hasn’t stopped the company’s fast growth, he said.
Corrections & Amplifications
Silver Lake Waterman is a new investor in the Series D round. An earlier version of this article incorrectly said the name was Silver Lake Partners. Additionally, Tarsadia Capital is one of the investors in Loft. A previous version of this article referred to it as Tarsadia. (Corrected on March 26.)