The venture arm of the trade group, Second Century Ventures, made a total of $43.8 million from selling shares in DocuSign, returning $20 million to NAR and keeping $23.8 million for recapitalization.

WASHINGTON — When DocuSign went public last month, the National Association of Realtors got a $20 million piece of that pie, according to NAR CEO Bob Goldberg.

Goldberg is also the president of Second Century Ventures, NAR’s venture capital arm and an investor in electronic signature provider DocuSign before its initial public offering. He, along with NAR’s leadership team and other staffers, spoke at the Treasurer Budget Forum at NAR’s midyear conference on Thursday.

SCV, a wholly-owned subsidiary of NAR, got $43.8 million for selling 28 percent of its DocuSign shares in the IPO, after initially investing $5 million, NAR First Vice President Vince Malta said at the forum.

Bob Goldberg

Of that $43.8 million, the SCV board of directors voted for a dividend back to NAR of $20 million, Goldberg said. NAR Treasurer Tom Riley noted that the initial capital investment by NAR to SCV — a line of credit — was $20 million, and therefore, SCV has now paid that back in full.

SCV returned that $20 million within three days of the IPO sale and kept $23.8 million “to help it recapitalize,” Goldberg said.

News of the eight-figure dividend comes as the 800-member NAR board of directors prepares to vote tomorrow on a proposed $30 increase in annual dues, a 25 percent jump from $120 to $150 per year. The trade group plans to use the additional funds to boost its annual spending for political advocacy, a transaction management platform for members and other initiatives by $35.5 million and shore up its reserves.

More than 80 percent of Inman readers oppose the proposed dues increase. The proposal has incited controversy and dissent. In an op-ed, later said to be the work of a consultant, MLSListings CEO Jim Harrison called for more transparency from the trade group, including “a statement affirming that no current or former NAR employees, consultants, volunteers or leaders would profit from or receive any proceeds associated with NAR’s sale of its DocuSign stock and/or interests.”

The NAR leadership team penned a furious response in which they said, “no members or staff have profited from the DocuSign initial public offering … Our Leadership Team and the Second Century Ventures Board of Directors have confirmed in writing that they have not benefited in any way from the DocuSign IPO.” Harrison later apologized for the op-ed and said it was written by a consultant under his name.

Elizabeth Mendenhall

At the budget forum, NAR President Elizabeth Mendenhall again said, “No one on this stage or any of the officers or any of the Second Century Ventures members have made money or benefited from that [the DocuSign sale] personally, so I want to make sure that’s clear.”

Asked Friday what NAR plans to do with the $20 million and why that money isn’t being used to mitigate or eliminate the proposed dues increase, NAR spokesperson Sara Wiskerchen said via email, “Funds will be used to replenish NAR’s reserves. It is not fiscally responsible for NAR to budget its annual funding needs, nor can those funding needs be met, with proceeds from a one-time investing payout.”

At the budget forum, a Louisiana Realtor asked whether there will ever be a time when SCV gives money to pay for NAR programs if the company continues to do well “like they did with DocuSign.”

“We can never say ‘never,’ that that will never happen, but those decisions are made by a separate board of directors,” Malta responded.

“[SCV’s] mission is not to fund NAR. Their mission is to help drive innovation in our industry. And if we take money out of that are we foreclosing some opportunities that we’ll have in the future for our industry. So those are going to be some very difficult decisions that we’ll be making in the future.”

NAR created SCV in 2008 for that purpose and invested in DocuSign in 2009, he said, and the money that SCV has kept will allow it “to further invest in other companies and in industry for our success as a whole.”

“Our budget is really designed upon sustaining programs at NAR and budgeting for those at NAR’s level and not whether we’re going to rely on windfalls from the sale of stock of future companies that SCV does very well in,” Malta added.

Goldberg, who noted he was on the founding team of SCV, said the venture capital fund was created because NAR needed to “place bets” with potential technology disruptors “to hopefully have influence with them so that when they become successful in any vertical, including real estate, we have a chance for a voice in what those companies do.” One recent investment SCV has made was in the digital notarizing startup Notarize.

NAR has both equity and board positions in several of these companies “to help influence what they do, to be Realtor friendly. That’s what we’ve got to do,” Goldberg said.

“The more that we can do to put the risk on the backs of somebody else, but at the same time they’re associated with a $5 billion brand, Realtor, that’s the perfect formula to bring people in this industry that will help our members be successful and lower the risk of our association in terms of the dollars that are being spent,” he added.

NAR President-Elect John Smaby lamented that NAR’s “unbelievable investment” in DocuSign wasn’t being celebrated more.

“Somehow this has gotten lost in the shuffle. This was a great thing for our association. It gives us security,” he told forum attendees.

“I hope in Second Century Ventures as time goes on we find another one. I really do. We should celebrate it, and it’s a great sign of our value proposition.”

Email Andrea V. Brambila.

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