So Redfin’s roadtrip paid off big time.
They just closed a $12 Million series C round led by Draper Fisher Jurvetson, giving them close to $20 Million is total financing to date. Techcrunch reports the company is gearing up for war. Marlow Harris at 360Digest and Greg at BloodhoundBlog, on the other hand, posit the investment is needed just to keep the company afloat.
I’m going to cut down the middle and say there’s no doubt that Redfin has huge overhead costs (how many other small brokers out there shoulder large developer teams and have to pay Seattle engineer salaries?) that are frightening to its longterm prospects. But this $12 million has also given them the warchest they needed to open in the Washington, D.C. market.
Redfin is trying a “go big or go home” strategy, and are still in their expansion phase. They need to scale their business quickly in order to see any return on the investment and the VCs are eagerly fueling this with bucket loads of cash. When they launch in Chicago (soon) though, they’ll be live in seven of the biggest real estate markets in the US and then I suspect the pressure will shift from expansion to proving the business model. Then, they’ll be no more excuses.
Until that point however, the company can show continue to show momentum by launching new offices under great fanfare. But at some time the business will have to mature and real profits are going to have to be shown — the end game is getting closer and closer. The end result, at least in my mind, is still not clear yet.