(Bloomberg) -- Compass, one of the biggest U.S. real estate brokerages, just raised an additional $370 million in a bid to increase share in an industry undergoing disruption.
The new funding round values the company at $6.4 billion, setting the stage for an eventual initial public offering. The money will help Compass, which has raised more than $1.5 billion in total, to continue building a software platform to streamline the process of buying and selling homes, the company said in a statement. That includes investments in cloud, mobile and artificial intelligence, as well as support for a new consumer app expected to launch in August.
Compass, founded in 2012 by Ori Allon and Robert Reffkin, positions itself as a real estate firm that uses proprietary technology to give its agents a leg up on the competition. It has also used its deep coffers of venture capital to grow through acquisitions. The company has acquired 14 brokerages and about 4,200 agents since the beginning of 2018, according to real estate tech strategist Mike DelPrete. Those additions helped Compass more than triple its revenue in the second quarter from a year earlier, according to the statement.
Compass is adding to its war chest during a tumultuous period for the industry. Companies led by startup Opendoor and Zillow Group Inc. are racing to popularize new ways for homeowners to sell their properties. The U.S. Department of Justice, meanwhile, is investigating potentially anti-competitive practices in residential real estate. Last week, Realogy Holdings Corp. announced a partnership with Amazon.com Inc. aimed at leveraging the e-commerce giant’s massive customer base to help the brokerage land new clients.
The company, whose new round includes previous investor SoftBank Vision Fund as well as first-timer Dragoneer Investment Group, is betting on business model innovations in addition to technology. It’s covering the cost of certain home improvements through a program, called Compass Concierge, intended to help sellers get more for their homes.
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