SA国际传媒

Sao Paulo-based real estate startup has raised a $250 million Series D in a round that is considered massive by U.S. standards but is positively gargantuan in Brazil. The round takes the company 鈥渢o unicorn status,鈥� according to CEO , although he would not disclose its exact valuation.

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led the round, which also included participation from another new investor as well as existing backers and . The financing brings the six-year-old company鈥檚 to over $335 million, according to its SA国际传媒 profile, and comes just nine months after its $70 million .

鈥淨uintoAndar makes it easier for people to quickly find homes and for landlords to better manage their properties,鈥� said , CEO of SoftBank Group International, in a prepared statement. 鈥淭he company is at the center of a global transformation of the real estate industry.鈥�

QuintoAndar describes itself as an 鈥渆nd-to-end solution for long-term rentals鈥� that, among other things, connects potential tenants to landlords and vice versa. It鈥檚 seen impressive growth in recent years. I spoke with CEO by telephone and he told me that the company has increased the number of rentals it helped facilitate by five times year-over-year. QuintoAndar also saw its revenue surge by more than three times last year, according to Braga. (It keeps the first month鈥檚 rent and a percentage fee of the transactions it helps facilitate.) The company has also more than tripled its number of employees to 1,000 compared to about 300-350 a year ago. On average, it has been closing over 4,500 new contracts per month.

Ultimately, its goal is to provide 鈥渁 seamless experience for tenants that removes the need for a guarantor, large security deposit, or rental insurance while also providing landlords the best liquidity in the market and fully guaranteed rent.鈥�

History

CEO Braga and , CTO, came up with the idea for QuintoAndar after getting their MBAs at Stanford University. As many startups do, the company was founded out of Braga鈥檚 personal 鈥渘ightmare鈥� of an experience in renting an apartment in Sao Paulo.

The search process was difficult as there was not enough information available online and renters are forced to provide a guarantor, or co-signer, from the same city or pay rent insurance, which Braga described as 鈥渧ery expensive.鈥�

鈥淥verall, I felt it was a very inefficient and fragmented process with no transparency or tech,鈥� Braga told SA国际传媒 News. 鈥淭here was all this friction and high cost involved, just real tangible problems to solve.鈥�

The concept for QuintoAndar (which can be translated literally to 鈥淔ifth Floor鈥� in Portuguese) was born.

鈥淟ittle by little, we created a platform that consolidated supply and inventory in a uniform way,鈥� Braga said.

The company took the search phase online for the first time, according to Braga. It also eliminated the need for tenants to provide a guarantor, thereby saving them money. On the other side, QuintoAndar also works to help protect the landlord with the guarantee that they will get their rent 鈥渙n time every month,鈥� Braga said.

Investors

As we previously reported, Braga acknowledges that some U.S.-based investors initially liked the premise behind the company but were intimidated by the complexities of investing in Brazil, such as the exchange rate risk and a turbulent political, and uncertain economic, environment.

鈥淎lthough the company was doing well in terms of traction, it was hard at first to convince investors,鈥� Braga said.

New York-based General Atlantic led its Series C and, according to Braga, 鈥渨as committed to Latin America and not afraid of Brazilian risks. They knew firsthand the importance and relevance of the problems we were solving.鈥�

, co-founder and managing partner of Argentina-based , notes that his firm has invested in QuintoAndar since its in 2016.

鈥淲e fell in love with the founding team first and their vision of significantly revolutionizing the way Brazilians rented properties,鈥� Szekasy said. 鈥淚t could take more than a month for someone that was looking at a property to get a transaction closed. Now it can be done in a day.鈥�

Szekasy said Kaszek, which recently closed on $600 million between two funds, is 鈥渟uper excited鈥� by QuintoAndar鈥檚 trajectory, execution, strategic vision and 鈥渉ow they鈥檝e been attracting talent in the different areas of the company.鈥�

Certainly, the fact that SoftBank led this round is notable. We reported earlier this year SoftBank Group had unveiled plans for , or what it described as 鈥渢he largest-ever technology fund focused exclusively on the fast-growing Latin American market.鈥� The news was validation that investors are starting to take the region more seriously.

Plans

Last year, QuintoAndar began expanding its offering to more regions in Brazil, and is now in 25 cities and nine metro areas in the country. With its new capital, the company plans to continue growing there and also to start expanding outside of its home country.

鈥淲e鈥檙e doing our homework to understand the pain points and where we can make the biggest difference,鈥� Braga told me.

QuintoAndar also recently began partnering with Brazil鈥檚 leading brick-and-mortar real estate agencies. Currently, 15 brokers work with company 鈥渢o provide landlords with personal face-to-face support.鈥�

It, of course, plans to continue hiring as well and continue building out its home improvement segment of its business.

鈥淥ur rentals are going faster at a better price, and through an even more seamless experience for tenants,鈥� Braga said.

Brazil has been the largest recipient of venture funding in an increasingly hot investment climate in Latin America. Earlier this year, we reported that venture funding in the region鈥檚 largest country exploded in 2018 to $1.3 billion, representing nearly two-thirds of all venture money raised in Latin America as a whole last year, according to , the Association for Private Capital Investment in Latin America. That鈥檚 52 percent more than the $859 million invested Brazil in 2017, and a staggering 369 percent increase from the $279 million raised in 2016, as you can see in the chart below: