Fifth Wall backs iBuyer in record-breaking €460m fundraise

Clikalia, a Spanish digital homebuying platform, has closed Spain’s largest ever venture capital round as it looks to expand the European iBuyer market.

Dominated by US companies such Opendoor, which went public via a SPAC a year ago, the iBuyer market promises customers quick, algorithm-based sales on their houses typically in return for a discount.

In Clikalia’s case, the company promises to give sellers an offer within 24 hours and, if accepted, a sale within seven days. The company then renovates the homes and sells them directly to customers.

Rise and fall of iBuyers

Business like Clikalia have grown in recent years in response to how time-consuming selling houses can be. A lack of data transparency and non-digitised processes slow down what they see as an industry ready to evolve.

After Opendoor went public in a $4.8bn SPAC deal, companies like Emoov launched their own iBuyer product for the UK market, while European startups like Nomad raised tens of millions to do their own part in digitising sales.

But the sector has also encountered hurdles along the way. Zillow, an Opendoor competitor and one of the most recognisable names in the US market, shut its iBuying business after reporting a third quarter loss of $328m in November.

Having relied on predictive analytics to price the homes it bought and renovated, Zillow could not navigate the volatility of the housing market during the pandemic, resulting in huge losses. Since February, Zillow’s share price has fallen more than 70%.

Caution has since grown among investors. Despite posting better than expected results in Q3 – including $2.3bn in revenue – Opendoor’s share price has fallen 42.5% since November (-63% since its February peak). The question is whether those investor jitters have been warranted or whether others can make the model work where Zillow couldn’t.

Clikalia’s expansion plans

The €460m funding round – led by VC firm Fifth Wall, with participation from New York-based Luxor Capital and debt from Deutsche Bank – gave the company the firepower to acquire Spanish property management company Inmho, providing access to more than 250,000 homes.

Clikalia, which buys about 1,800 homes per year, said it expects an additional 4,000 iBuying opportunities annually from Inmho’s portfolio.

The company plans to expand into other southern European markets, starting with Portugal in Q1 2022, and introduce new products such as mortgage financing and home insurance.

Miguel Nigorra, partner and head of Europe at Fifth Wall, said: “The European market is a core focus for Fifth Wall and we are very happy to support successful entrepreneurs like [co-founders] Alister [Moreno] and Pablo [Fernandez].”

Moreno said: “We’re aiming to create a real estate ecosystem reinventing the way people buy and sell homes, focusing on the customer needs.

“Our latest round of funding, which includes previous investors and the entrance of new investors with high knowledge of the iBuyer industry like Fifth Wall and Luxor reinforces our commitment to disrupt the market, leveraging a tech-enabled platform to simplify the home transaction process for consumers, while providing additional value-added services.”