(Bloomberg) -- WeWork's calamitous effort to take itself public has raised red flags for other SoftBank-backed real estate startups -- and led an executive at the brokerage Compass to send its employees an eight-point memo highlighting differences between the two firms.
Compass, like WeWork, has relied heavily on funding from SoftBank Group Corp.'s Vision Fund. The brokerage has become a major player in high-end markets like Manhattan and San Francisco, though some real estate experts say it is more like a traditional brokerage than a tech-industry disrupter.
Unlike WeWork, Compass has no debt and is valued at a revenue multiple comparable to publicly traded real estate technology companies, according Chief Financial Officer Kristen Ankerbrandt.
“Over the past few weeks we have seen comparisons being drawn between Compass and WeWork simply because we share a single investor,” Ankerbrandt wrote to employees last week in an email obtained by Bloomberg. “To be clear, our businesses are quite different -- in terms of our business model, capital structure, customers, culture and investments.”
Ankerbrandt also boasted of Compass's deep roster of investors, including Qatar Investment Authority and Dragoneer Investment Group; a 425-member tech team building tools to differentiate Compass from other brokerages; and a frugal leadership team that “books coach tickets and does not fly on private jets.”
In December 2017, the Vision Fund agreed to invest $450 million in Compass, touted at the time as the largest real estate technology investment in U.S. history. The Vision Fund also participated in subsequent raises, including a $370 million round announced in July that valued the brokerage at $6.4 billion. At the time, the company said it would use the money to continue building a software platform to streamline the process of buying and selling homes.
Compass, led by former Goldman Sachs Group Inc. banker Robert Reffkin, has used that capital to acquire competing brokerages and build technology intended to help agents stand out from its rivals.
Representatives for Compass and the Vision Fund declined to comment.
To contact the reporter on this story: Patrick Clark in New York at pclark55@bloomberg.net
To contact the editors responsible for this story: Craig Giammona at cgiammona@bloomberg.net, Christine Maurus
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