Over the course of about two weeks, real estate marketplace Zillow went from putting its tech-bolstered house flipping business on pause to flat out exiting that segment altogether on Tuesday.
“We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated,” Zillow CEO Rich Barton said in a statement, as the company laid off 2,000 workers and is now reportedly looking to sell thousands of homes.
So-called iBuying may not have been Zillow’s largest line of revenue, but the news matters because the business of using algorithms to flip homes at scale has been red-hot, with companies including Redfin and Opendoor in the space. And the model came with a string of doubters from day one: Its costly for the company as it is effectively buying the property itself while house-flipping has been a fragmented practice because factoring in the different costs of labor and the particularities of a specific market is difficult to automate.
Here’s my colleague, Lance Lambert, on the topic: “But don’t pin the failed iBuyer program simply on the housing market or the pandemic. This business unit was a major money loser from day one. The company struggled to both forecast home prices, as Zillow’s CEO admitted on Tuesday, and turn home-flipping into a scaled business.
‘Zillow quitting its iBuyer business shouldn’t necessarily come as a surprise to those familiar with the flipping industry. Most successful flipping is done by local flippers using intimate knowledge of existing home conditions, renovation costs, and market idiosyncrasies, which is something that is very difficult to obtain purely through an automated home value estimate,’ Ralph McLaughlin, chief economist at Kukun, a real estate analytics firm, tells Fortune.”
This all begs the question: Was this a Zillow thing? Or is this a larger limiting factor for the iBuying industry as a whole?
It’ll be hard to say until more financial numbers are out for Zillow’s competitors, but investor and Opendoor co-founder is certainly dubbing it as an execution error. “Selling or shorting Opendoor due to Zillow’s flaws is akin to shorting Google due to Yahoo’s inability to monetize search well or return long tail queries properly,” he tweeted Tuesday.
A TAKEAWAY FROM THE RISE OF RELIGIOUS TECH: In general, the tech industry and organized religion aren’t two words you’d typically put in the same sentence (except for a few one-off examples in which say a digital church worshipping A.I. is founded and shuttered within a matter of years). The current center of venture capital investing and much of the tech world, San Francisco, is known to be among the least religious parts of the country. But as the coronavirus has pushed even the most in-person parts of people’s lives online, investors it seems are betting religious tech could be the next untapped opportunity.
On Wednesday, Hallow, a Catholic prayer and meditation app, raised $40 million in funding in a round of funding led by Drive Capital. That comes as Pitchbook estimates that about $35.4 million (not including the Hallow round) in funding went to U.S.-based religion-related tech businesses in 2021—up from $2.2 million in 2016. Meaning even with rising figures in this still small space, Hallow’s new round is large.
You can read more about Hallow here, but it’s also notable that Drive Capital is based out of Columbus while Hallow is headquartered in Chicago—metro areas in the midwest of the country, where religion plays a much bigger role. And as more and more venture capital flows to areas outside of the New York City, Boston, and San Francisco trifecta, it’s worth meditating upon how different kinds of previously overlooked startups more representative of those walks of life could rise as well.
Jessica Mathews curated the IPO and SPAC sections of this newsletter.
- HoneyBook, a San Francisco-based maker of client flow and cash flow management software, raised $250 million in Series E funding. Tiger Global Management led the round and was joined by investors including Durable Capital Partners, Norwest Venture Partners, Citi Ventures, and OurCrowd.
- Cloudbeds, a San Diego-based company focused on the hospitality industry, raised $150 million in Series D funding. SoftBank Vision Fund 2 led the round and was joined by investors including Echo Street, Walleye Capital, Viking Global Investors, PeakSpan Capital, and Counterpart Ventures.
- Notable, a San Mateo, Calif.-based healthcare automation company, raised $100 million in Series B funding. ICONIQ Growth led the round and was joined by investors including Greylock, F-Prime Capital, and Oak HC/FT.
- Gather, a San Francisco virtual gathering startup, raised $50 million in Series B funding. Sequoia Capital and Index Ventures led the round.
- Abound, a New York City-based wholesale marketplace connecting small business owners and independent brands, raised $36.7 million in Series B funding. The D. E. Shaw group led the round and was joined by investors including PointState Capital, Left Lane Capital, RiverPark Ventures, and All Iron Ventures.
- illumigyn, a Neve Ilan, Ill-based gynecological imaging company, raised $33 million. Yozma Group Korea and Ubicom Holdings Japan invested.
- Lumigo, an application monitoring and debugging company, raised $29 million in Series A funding. Redline Capital led the round and was joined by investors including Wing Venture Capital and Vertex Ventures US.
- PadSplit, an Atlanta-based maker of a shared household marketplace, raised $20.5 million in Series B funding. Investors include Core Innovation Capital, Impact Engine, Citi, Mark Cuban Companies, and Cox Enterprises.
- Velocity, a Tel Aviv-based startup for accelerating build and delivery of products, raised $17 million in Series A funding. Insight Partners led the round and was joined by investors including Hetz Ventures and Greycroft.
- Puls Technologies, a Livermore, Calif.-based on-demand home repair service, raised $15 million. Hanaco Venture Capital led the round.
- Kinoo, a San Francisco, Calif.-based video communication system, raised $13 million in funding with investments from Learn Capital and Galaxy Interactive.
- Tarabut Gateway, a Dubai-based open-banking platform, raised $13 million in seed and pre-Series-A funding. Tiger Global led the round.
- BrainCheck, a Houston-based cognitive healthcare platform for physicians, raised $10 million in Series B funding. Next Coast Ventures and S3 Ventures led the round and were joined by investors including Nueterra Capital, Tensility Ventures, and True Wealth Ventures.
- Agora, a New York City-based early-stage real estate tech firm, raised $9 million. Aleph led the round.
- Vivoo, a San Francisco-based wellness tracker to provide personalized nutrition and lifestyle advice based on at-home urine tests, raised $6 million in Series A funding. Draper Associates led the round and was joined by investors including ONCE Ventures, Revo Capital, 500 Startups, Global Ventures, and Halogen Ventures.
- Hakkoda, a Boulder, Colo.-based firm specializing in Snowflake, raised $5.6 million in funding. Tercera led the round.
- Oxeye, a Tel Aviv-based application security testing company, raised $5.3 million in seed funding. MoreVC led the round.
- Activeloop, a Mountain View, Calif.-based data collaboration company, raised $5 million. 468 Capital and CM Ventures led the round and were joined by investors including Tribe Capital and Shasta Ventures.
- Raydiant Oximetry, a women’s health company, raised $5 million in Series A2 funding. Avestria Ventures led the round and was joined by investors including KOFA Healthcare, V-Capital, Band of Angels, FemHealth Ventures, RHIA Ventures, and SteelSky Ventures.
- Omni Creator Products, a Raleigh, N.C.-based platform for game players to create in-game worlds, raised $4.3 million. Upfront Ventures led the round and was joined by investors including Eden Chen of Pragma, former Epic Games president Paul Meegan, and Everblue Management.
- Marker Learning, a New York City-based startup for the remote administration of learning disability assessments and services, raised $4 million in seed funding. Primary led the round and was joined by investors including Divergent Investments, Night Ventures, and Operator Partners.
- Martie, a San Francisco-based online grocery store, raised $3 million from Upfront Ventures.
- Afterparty, a Los Angeles-based maker of an NFT and social token platform, raised $3 million in seed funding. Acrew Capital and TenOneTen Ventures led the round and was joined by investors including Palm Tree Crew, Act One Ventures, Hex Capital, and Red Light Management.
- Greenwork, a San Francisco-based company focused on infrastructure workers, raised $2.4 million. Investors include Climate Capital, Defy Partners, Global Founders Capital, GV, and Kleiner Perkins Scout Fund.
- FTV Capital invested in Vagaro, a Dublin, Calif.-based business management software maker for the beauty, fitness, and wellness industry, valuing it at $1 billion.
- Alliance Ground International, a portfolio company of Audax Private Equity and Greenbriar Equity Group, acquired Maestro International Cargo, a Chicago, Ill.-based provider of ground and ramp handling services at O’Hare airport. Financial terms weren't disclosed.
- Kareo, backed by Montreux Equity Partners and Golub, merged with PatientPop, a Santa Monica, Calif.-based healthcare IT company, to form Tebra, a healthcare tech business. Financial terms weren't disclosed.
- Kellermeyer Bergensons Services, a portfolio company of Cerberus Capital Management, acquired BRAVO! Building Services and two other related companies, BRAVO! Facility Services and BRAVO! Innovative Solutions, New Jersey-based facility servicing companies. Financial terms weren't disclosed.
- Outdoor Living Supply, backed by Trilantic North America, acquired Landscapers Depot, a supplier of landscape, hardscape and masonry supplies. Financial terms weren't disclosed.
- Northlane Capital Partners invested in Choice Financial Group, a Virginia Beach, Va.-based insurance agency. Financial terms weren't disclosed.
- Rock Gate Partners recapitalized Perimeter Security Partners, a Brentwood, Tenn.-based provider of perimeter security. Financial terms weren't disclosed.
- TPG invested in Keter Environmental Services, a Stamford, Conn.-based recycling and waste management company. Financial terms weren't disclosed.
- Waterline Renewal Technologies, a portfolio company of Behrman Capital, acquired Pipe Lining Supply, a cured-in-place pipe lateral lining and drain, waste and vent sewer pipe rehabilitation supplier. Financial terms weren't disclosed.
- Vestwell, backed by Point72 Ventures, acquired Sumday, a subsidiary of BNY Mellon that helps states administer college savings plans. Financial terms weren't disclosed.
- USALCO, backed by H.I.G. Capital, merged with G2O Technologies, a Phillipsburg, N.J.-based wastewater treatment portfolio company of Arsenal Capital Partners. Financial terms weren't disclosed.
- Management of PCF Insurance Services, an insurance brokerage, is acquiring the business from HGGC and lender Owl Rock. The deal values the business at over $2.2 billion. HGGC will remain a minority stakeholder.
- Cross River Bank acquired Betterfin, a New York City-based lender backed by Reddit co-founder Alexis Ohanian. Financial terms weren't disclosed.
- Pretium acquired Anchor Loans, a Thousand Oaks, Calif.-based provider of financing to residential real estate investors and entrepreneurs, from Wafra Capital Partners. Financial terms weren't disclosed.
- ShopBack will acquire Hoolah, a Singaporean “buy now, pay later” startup backed by iGlobe Partners. Financial terms weren't disclosed.
- Dubai plans to list Dubai Electricity & Water Authority in the United Arab Emirates, according to Bloomberg. An IPO could value the firm at more than $25 billion.
- Mercury Retail, the company owning Russia’s largest alcohol retail chain, plans to raise up to $1.3 billion in an offering of approximately 200 million GDRs in Moscow, per Reuters. An IPO could value the company at around $13 billion.
- Tempus Labs, a Chicago-based clinical and molecular data and operating system company, is weighing an IPO, per Bloomberg. The company last said it was valued at $8.1 billion. Baillie Gifford, Google, Franklin Templeton, Novo Holdings and T. Rowe Price Group back the firm.
- Rubix Group Holdings, a UK-based industrial maintenance and repair company, withdrew plans to IPO in London, according to Bloomberg. It had planned to raise $986 million. Advent International backs the firm.
- Allbirds, a San Francisco-based wool shoemaker, and its shareholders raised $302.9 million in an offering of 20.2 million shares (19% sold by insiders) priced at $15 per share—they had previously planned to raise up to $269 million. The company posted net revenue of $219 million in 2020 and reported a net loss of $26 million. Maveron, Tiger Global, T. Rowe Price, Fidelity Investments, and Lerer Hippeau Ventures back the firm.
- Winc, a Santa Monica, Calif.-based wine club membership company, now plans to raise up to $21.5 million in an offering of 1.5 million shares priced between $12 and $14—it had previously planned to issue 5 million shares. The company posted $65 million in net revenue in 2020 and reported a $7 million net loss. Bessemer Venture Partners, Shining Capital, and Cool Japan Fund back the firm.
- Maris-Tech, an Israeli intelligent video and audio surveillance and communication systems company, filed for an IPO in the U.S. The company reported $987,883 of revenue in 2020 and a net loss of $640,343.
- A blank check company sponsored by Brooklyn Nets player Kevin Durant and his manager and business partner Rich Kleiman, filed to raise $200 million in an IPO. The SPAC, Infinite Acquisition Corp., will focus on sports, health and wellness, food tech and supply, e-commerce, and crypto and digital assets.
- Valor Ventures added WNBA Champion Renee Montgomery as a general partner.
This is the web version of Term Sheet, a daily newsletter on the biggest deals and dealmakers. Sign up to get it delivered free to your inbox.