After teasing its plans to become a tech investor last month, California Regional Multiple Listing Service has created a venture fund and invested in its first target: real estate data platform Perchwell, the MLS announced Wednesday.
At the same time, Perchwell announced it has raised $15 million in a Series A round lead by Founders Fund with additional investors Lux Capital and CRMLS also participating. Along with an earlier $4 million seed round, this brings Perchwell’s total funding to $19 million. The company declined to share its implied valuation after this round.
Founded in 2015, Perchwell is a real estate data visualization, search, and collaboration platform for agents and their clients. It’s a “front end” MLS product — “front end” referring to what agents see when they log on — that marries listing information to public and private data sets that provide context to those listings and provides workflow and productivity tools such as custom analytics, reports, listing presentations, client collaboration and contact management.
The deal between CRMLS and Perchwell closed December 1. The companies declined to comment on the amount CRMLS invested in Perchwell or its ownership stake. Founders Fund, which contributed the majority of the round, has also invested in several real estate-related firms, including Hutch, Bungalow, Cover, Harbor, Sundae, Snapdocs, Blend, Cadre, Porch, Compass and Notarize.
CRMLS, the nation’s largest MLS with more than 110,000 agent, broker and appraiser subscribers, said it created its venture fund “as a hedge against changing market forces” in the real estate industry and views new technology investments as “necessary and beneficial” for its subscribers, their clients and the industry at large.
CRMLS is taking this “extraordinary step” to proactively meet its users expectations, CRMLS CEO Art Carter told Inman via email.
“The 100,000+ professionals who rely on CRMLS have a right to expect us to serve them with the best technology products available,” he said.
“We’ve been able to meet their expectations by working with technology providers in the same way other MLSs do. However, the massive investments in the real estate technology space over the past two years have meant that expectations are much higher from both our users and the consumers they work with. Not only has the quality of products increased, but outside interests – including competing ones – are gaining greater control over the technology our users engage with most.”
Last month, Carter spoke of having been “burned by situations where vendors that we’re relying upon may not be ultimately owned by organizations that our brokerage community feels comfortable with,” referring to Compass’s acquisition of offers tool Glide and Zillow’s purchase of showing management firm ShowingTime.
“The old paradigm is MLSs making site license agreements with small, independent vendors,” Carter told Inman Tuesday. “Since many of those vendors are no longer small or independent, it is much more difficult for MLSs to tell their users with conviction that they’re spending their dues money diligently.
“Ultimately, the need that we’re serving is the need that real estate professionals have for high-quality technology that enables them to do their jobs without worrying about how their data gets used.”
He said CRMLS’s investments would be funded by its reserves. Real estate consultant Victor Lund of WAV Group has previously told Inman that, in general, MLSs keep a minimum of six months of dues but many MLSs have reserves and other assets that far exceed three years of dues.
“Moreover, these companies rarely have debt unless it is on their building,” he said. “You can assume that they have plenty of capital. The large MLSs may have more than $20 million in reserves.”
The new fund is a separate company, CRMLS Fund LLC, incorporated Nov. 24, though its official name will be announced later, according to Carter. CRMLS has directly invited its member associations to invest in the CRMLS Fund in exchange for ownership stakes and would welcome investment participation in the CRMLS Fund from other like-minded MLSs, Carter said.
“As 2022 approaches, CRMLS is intensely focused on making business moves that will significantly impact the agents and brokers that rely on us,” he said in a statement. “The time to stand still and wait has long passed, and we welcome others in the industry that stand by this vision of action to participate with us!”
CRMLS expects to use the fund to invest in companies that, like Perchwell, give its subscribers choices in “state-of-the-art” products and services and share the MLS’s vision of the future.
“We want a world where MLS technology empowers real estate consumers and professionals in their property transactions,” Carter said. “People who buy and sell real property need, want, and benefit from the services of the hard-working agents, brokers, and others who work in this industry. The multiple listing service is the best way anyone has ever found to create a stable, high-functioning, and equitable real estate marketplace.”
That vision includes products that facilitate interoperability among other technology products via API — which Perchwell noted was a “major differentiator” for its platform.
“Until now, agents have had to cobble together a Frankenstein set of legacy point solutions that do not integrate with one another,” Brendan Fairbanks, founder and CEO of Perchwell, told Inman via email.
“Perchwell’s mission is to empower agents with the next generation of technologies to best serve their clients and to thrive in today’s market. Perchwell’s platform includes comprehensive workflow tools and a data/API layer that is the foundation for interoperability/integration among disparate tech products:
- Perchwell’s web and mobile apps are agents’ day-to-day workflow tools for everything from syndicating listings to searching and analyzing the market to collaborating with clients
- Comprehensive data platform with myriad data sets aggregated, structured, and made available at agents’ fingertips
- Plug-and-play APIs for easy interoperability and integrations with other products.”
That interoperability is one reason CRMLS chose to invest in the company.
“The multiple listing service can do the best version of its job by giving the people it serves the highest-quality product possible,” Carter said. “Our experience shows that the best way to accomplish this is with a modular, API-driven approach. MLSs must give vendors the ability to connect to MLS data as seamlessly as possible, and the software MLSs offer their users must do a better job presenting to consumers on behalf of their brokers and agents.”
CRMLS already offers front ends from CoreLogic, Black Knight, FBS and Rapattoni, but Perchwell stood apart, according to Carter.
“[I]ts differentiating features include how it handles data on the back end and how it presents to users on the front end,” Carter said. “Perchwell makes it easy for MLSs like ours to plug in data without having to do too much translation or allocate everything into silos. For users, in plain language, it just looks good and works.
“I don’t think I’m being unfair when I characterize other popular front ends as having dated user interface designs. We’ve seen some great advances in recent years, but we acknowledge that many agents and brokers are dissatisfied with how their MLS platforms look in comparison to other sites they visit.”
So far, Perchwell has only debuted in New York City where the company says it’s the technology platform of choice among top local and national brokerages including Sotheby’s International Realty, Berkshire Hathaway HomeServices, and Serhant. Perchwell also operates the Real Estate Board of New York (REBNY)’s Residential Listing Service, the Big Apple’s de facto MLS.
Keith Rabois, partner at Founders Fund and co-founder of Opendoor, said in a statement that Perchwell had “already made an outsized impact on the real estate industry” through its accomplishments in New York City that make it integral to the functioning of that market.
That impact is how CRMLS and Perchwell got together in the first place.
“We connected with CRMLS through some of our brokerage clients in NYC who also operate in California — given their great experience with Perchwell in NYC, they’re hoping to have Perchwell in their other markets as well,” Fairbanks said. “As soon as we met with the CRMLS team it was clear that we have similar visions about the future of real estate technology and that a broad partnership made a lot of sense, so it only took a few weeks to finalize.”
Carter said several of those clients had spoken in “glowing terms” about Perchwell and that CRMLS sees a “substantial benefit in offering a product that doesn’t have to rely on legacy technology.
“Very few companies have tried to ‘start from scratch,’ so to speak, in this space, and since Perchwell builds its approach on newer design principles — especially in terms of its UI — we think that they have a unique edge on some well-established products.”
Perchwell plans to use its new funding to expand its product and engineering teams and scale its platform nationally. CRMLS will be among the first markets the company expands to, sometime in 2022.
Carter declined to comment on any future investments the CRMLS Fund will make other than to say it will focus on “helping bring companies in early stages of maturity further along.”
“I encourage interested entrepreneurs to reach out to us,” Carter said.