Unicorn alert: QuintoAndar raises US$250 million in Series D led by SoftBank

Contxto – Brazilian proptech QuintoAndar recently raised US$250 million in a Series D mega-round. SoftBank led the investment, joined by Dragoneer and former backers including Atlantic and Kaszek Ventures.

In what I consider the best month for Latin American proptech, QuintoAndar has raised the bar with its new unicorn status. LinkedIn even recently ranked it as the fifth-best Brazilian startup where professionals aspire to work.

Last week OpenCasa and Flat, both pioneering the iBuying model in Latam, also raised debt and equity respectively. Like QuintoAndar, they want to improve property liquidity in their respective markets.

QuintoAndar from Brazil has created a marketplace where users can explore, book, rent and promote their properties online. Although not iBuying, the marketplace keeps track of listings, visits, transactions between tenants and landlords, as well as binding contracts for both parties. 

While previously people needed co-signers, deposits and rental insurance, QuintoAndar’s credit analysis algorithm takes care of contract compliance without these traditional requirements.

Founded in São Paulo, QuintoAndar currently employs over 1,000 people with a total amount raised of US$345 million. Its previous Series C round for US$64 million led by General Atlantic closed just nine months ago. In fact, though the exact valuation isn’t confirmed, the founder says it was well above US$1 billion.

The need for liquid assets 

Long-term rentals in Brazil are still outdated, being a very manual and tedious process. Especially for big cities like São Paulo and Rio de Janeiro, where bureaucracy prevails. Many still experience never-ending steps including large upfront bond deposits or co-signers who begrudgingly accept the ridiculous insurance fees. 

Moreover, great customer service has never exactly been a landlord’s main strength. QuintoAndar serves as an intermediary seeking to improve satisfaction while efficiently managing processes for both parties. 

The real estate industry in Brazil (and Latin America, for the most part), are seeing some interesting developments. According to Braga, Brazilians are looking less to actually own a house and rather choose to rent. Having less of a capital commitment in a highly illiquid asset helps them conserve cash for flexible endeavors. 

In the end, this gives users more financial freedom.

Also according to Braga, the company’s main goal is to improve property appraisals over the platform while not necessarily paying too much attention to the recent unicorn status. By year-end, the company expects about 2 million visits with roughly 4,500 monthly deals. 

Braga also believes that one of his company’s main reasons for success involves the platform seamless user experience as well as the actual liquidity solution. 

Personally, I don’t really see where liquidity comes into the picture. The startup pretty much only functions as a promotion portal, not necessarily granting users cash earlier than before.

Unicorn status

Real estate continues to be a neglected market where much has yet to be done. Moving forward, the capital injection will allow QuintoAndar to grow its user base by reaching more Brazilian cities. 

Expanding its team and building commercial partnerships with brokers are also part of QuintoAndar’s short-term plans. Long-term, the company hasn’t discarded the idea of creating more financing products for users, either. This may involve using data to offer more tangential services, such as home repairs and renovations.

Along with Nubank, Gympass and Loggi, the company is now part of SoftBank’s growing unicorn farm. While ego-pleasing, I respect the fact that the founder prefers to focus on QuintoAndar’s core path over vanity metrics. 

“I’m more focused on the long-term mission that we have, and not overly excited about being a unicorn. Tomorrow’s another day, we have to keep working,” said the founder to TechCrunch.

-VC