Real Estate Startup Compass Raises $450 Million In Downsized IPO

Real estate technology startup Compass scaled back its initial public offering (IPO), raising $450 million, about 50 percent less than anticipated.

Compass priced its 25 million shares at $18 each on Wednesday (March 31), Financial Times reported. The New York-headquartered company reduced the number of shares it planned to sell by almost one-third and its top price range by more than 25 percent.

The initial public offering price was expected to range between $23-$26 per share with a float of 36 million shares, according to a company press release. The SoftBank-backed real estate tech platform filed with the Security and Exchange Commission (SEC) earlier in March.

In its prospectus, Compass indicated that it had a 90 percent retention rate for principal agents over the past three years. It tries to differentiate itself from other real estate platforms by focusing on technology to boost agents’ success.

“Real estate agents, they’re independent contractors, they’re entrepreneurs,” said Mike DelPrete, an independent real estate tech adviser. “The moment Compass becomes less lucrative to agents, there’s a big retention problem.”

Compass, led by former Goldman Sachs banker Robert Reffkin, previously raised over $1.5 billion in capital. In 2019, the company was valued at $6.4 billion. Last year, Compass lost $270 million on $3.7 billion in revenue. By way of comparison, the company lost $388 million on revenue of $2.4 billion in 2019.

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