Pacaso, a co-ownership platform for luxury homes, recently announced a $125 million Series C funding round led by SoftBank's (OTCMKTS: SFTBY) Vision Fund 2. This brings the total raised by Pacaso since its inception in October 2020 to $215 million, valuing the company at a $1.5 billion unicorn valuation. Reportedly, the company has set a record for being the fastest company in U.S. history to have reached unicorn status.
The platform now manages roughly $200 million in real estate and is currently expanding internationally to Spain. That said, it hasn't been without challenges, and recent local opposition in Napa Valley, California, highlights that.
Nevertheless, this new funding round led by SoftBank will give Pacaso the ammunition it needs to continue its rocketship growth and help more people access luxury real estate globally.
How Pacaso works
Founded by former Zillow (NASDAQ: Z, NASDAQ: ZG) executives Austin Allison and Spencer Rascoff, Pacaso is a marketplace for buying, owning, and managing luxury second homes. The platform curates top-tier second homes in high-end markets across the U.S., including spots like Napa, Lake Tahoe, and Palm Springs, California; Aspen, Colorado; and more.
The co-ownership model works by offering as little as one-eighth and up to one-half ownership in a property owned through an LLC. Owners become shareholders of the holding company. With other co-ownership models, such as timeshares, owners do not own any physical assets. Pacaso is trying to change that.
Pacaso then professionally manages the properties, and owners get to enjoy their designated timeslots. In this sense, Pacaso acts as an intermediary between the owners, handling all the property's financing, administration, and management.
According to media reports, California wine-country residents are frustrated by Pacaso, so much so that they formed an organization called Stop Pacaso Now. According to their website, "Pacaso is the newest way for Silicon Valley bros and venture capital vultures to make a quick buck at your expense: By turning your neighbor's house into what's basically a glorified timeshare."
In a recent interview, Pacaso CEO Austin Allison notes: "Any new idea takes time to be understood. What's interesting about this is that co-ownership is actually not a new idea. It's been around for decades and decades, and it's very common in all the markets where we operate. In Napa and Sonoma County, for example, the market we mentioned, we faced some resistance. There's over 30,000 homes that are non-owner occupied as a primary residence and owned by an LLC or a Trust, which are multi-member entities just like Pacaso. This ownership structure of LLC ownership with multiple members is very common in all the markets where we operate. But Pacaso, for the first time, is a company that's providing a service around this type of ownership."
Time will tell how strong the grassroots opposition is to the co-ownership model. However, the demand for Pacaso's properties and services is undeniable. The company now has an annualized revenue run rate of $330 million and, in the past quarter, saw website traffic jump 200%.
The Millionacres bottom line
Co-ownership of real estate assets will be a growing trend in the coming years. As affordability decreases and people seek greater access to recreational properties both domestically and internationally, expect to hear more about platforms like Pacaso -- they aren't the only players. For instance, Kocomo, a similar Mexico-based platform, recently raised $56 million to execute a similar mission in South and Central America.