Urban Compass, the young New York startup that emerged from stealth mode in May with a home rentals platform and accompanying hyperlocal social network, has closed a Series A round of funding totalling $20 million. The new investment values the company at what sources tell me is $150 million. With the news, Urban Compass is also announcing some extra, strategic investors in the form of Advance Publications, the parent of Conde Nast; and Marc Benioff, the founder and CEO of Salesforce.com. Existing, disclosed investors from Urban Compass’s $8 million seed round, including Founders Fund, Thrive Capital, .406 Ventures, Goldman Sachs and others, also participated in the Series A.
As a bit of background on Urban Compass, the company raised its outsized seed round in December 2012, from top-shelf VCs, while still very much under the radar. Part of the early VC boost was on the strength of the founders: before Urban Compass, CEO and co-founder Ori Allon worked at Twitter as its director of engineering, after Twitter acquired his startup, Julpan. Before that, he worked at Google after the search giant bought his previous startup (which hadn’t even gone so far as to launch; it was essentially Allon’s PhD thesis about a new search algorithm called Orion, which is now a part of Google’s search engine). Co-founder Robert Reffkin, meanwhile, hailed from Goldman Sachs and has made a number of marks in civic and charitable leadership.
It’s the respective strength of these two founders — one with the technical muscle; the other who is very close to thinking about what’s needed in the urban ecosystem, not to mention a strong finance background — that has led Urban Compass to thrive. “Things have been exceeding all expectations” since its launch in May, Allong tells me. He says the main site has “great traffic”, and people are actually using the platform, quite a lot. The startup has doubled revenues two months after launch, and in October expects to be generating revenues of $1 million/month. “We have a clear path for being profitable,” Allon says. “Although we will need to invest a lot for the next stage of growth.”
What will that growth entail?
The company is moving in a couple of different directions. Down the line, there are plans to expand to further cities outside of New York city — the focus, he says, will continue to be on urban centers for the time being. “Every big city is a candidate,” he says.
But first there will be further steps to enhance what Urban Compass offers to existing users — specifically in the area of aftermarket services. In other words, after Urban Compass helps you find your next apartment and connect you with other locals and nice places to eat, it will make sure you have broadband, furniture, and whatever else you will want to turn your apartment into a home. This will tap into some of the search technology that Allon is expert at: “People provide a lot of information to us already,” he notes, and that will help Urban Compass in turn provide them with more useful data.
The Advance investment is an interesting one, in that it could help Urban Compass ramp up not just the content that it offers users on its site, but also ways of marketing its service across that company’s publishing network. The link up with publishers is not one that was overlooked by others. I have heard that Hearst was also interested in coming in on this round but Conde Nast refused to invest with them.
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