( Knight-Ridder Open )
Jul 25, 2006 (The Seattle Times - Knight Ridder/Tribune Business News via
COMTEX) --
Zillow.com attracts offers the way a low-priced home lures buyers in Seattle.
The Seattle company, which provides estimates of home values based on
publicly available information, is disclosing today that it received $25
million in a second round of venture capital.
To date, the company has raised $57 million, a staggering amount considering
it launched its product only five months ago, in February.
Chief Financial Officer Spencer Rascoff said Zillow was not looking for
money, but that it decided to take the offer so it can grow faster than
planned.
Boston-based PAR Capital Management led the round of funding after it
contacted Zillow about making an investment, Rascoff said. Zillow's previous
investors, Benchmark Capital and Technology Crossover Ventures, also
participated in the round, which took two only weeks to close.
"There was no formal process," Rascoff said. "In fact, I wouldn't call it a
process. It came together really quickly."
PAR typically invests in publicly held companies, but Rascoff said the fit
was natural and consistent with Zillow's other investors. PAR had previously
invested in Expedia, which was founded by Rich Barton, Zillow's chief
executive. Zillow's other investors also had a close relationship with Barton
before investing.
Rascoff said Zillow received attention because it is doing well at getting
customers and advertising. The site receives about 2 million to 3 million
visitors a month. In addition, it has about 50 direct relationships with
advertisers and thousands more through Google ad links.
With the additional funding, the company plans to add at least 40 employees
to its staff of 118. Rascoff would not say what development projects the
company was working on.
"We are being a little bit tight-lipped about what's coming next with
respect to the product, but we are constantly trying to improve the quality
of the underlying data," he said.
Currently, Zillow provides valuations on 67 million U.S. homes, and claims
an accuracy of plus or minus 5 percent in the Seattle market. The company
would not disclose any of its financials. Other companies diving into the
online real-estate business locally include Seattle-based Redfin and
Kirkland-based HouseValues.com.
Zillow is the second Seattle company in the past two weeks to get funding
after investors approached it. Seattle-based Jobster, which assists with
online recruiting, raised $18 million, in part, from the venture arm of Reed
Elsevier.
Rascoff said investors are interested in the "big disconnect" between the
amount of advertising dollars being spent online and the amount of time
people spend online compared with other mediums. "There's a lot of wind at
your back in the advertising space," he said. "We are well positioned."
VENTURE INVESTMENT TREND ENCOURAGING
Venture-capital investing in the U.S. and Washington state in the second
quarter hit levels not seen for several years, according to The MoneyTree
survey being released today.
In the U.S., $6.35 billion was invested in privately held companies in the
second quarter, up 2.4 percent from the prior quarter. In Washington, $311.6
million was invested, up 15.7 percent from the first quarter. The quarterly
results had not been as high in the U.S. since 2002, or in the state since
2001.
The increases are a sign that investors are optimistic, analysts said during
a MoneyTree conference call Monday.
The MoneyTree survey is compiled by PricewaterhouseCoopers, Thomson Venture
Economics and National Venture Capital Association.
To see more of The Seattle Times, or to subscribe to the newspaper, go to
http://www.seattletimes.com.
Copyright (c) 2006, The Seattle Times
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