A week before the country went into lockdown last year, Avenue 8, a mobile-first residential brokerage, made its first agent hire. Now, the company has nearly 100 agents and said Monday that it has nabbed $14 million in new funding.
The San Francisco-based company said the Series A will fuel its expansion beyond Southern California to new markets, including New York and Miami.
“Brokerages of the past functioned as companies that agents worked at,” said Michael Martin, who co-founded Avenue 8 with Justin Fichelson, a Bay Area agent who previously appeared on Bravo’s “Million Dollar Listing San Francisco.” “Brokerages of the future will have a much more integrated suite of offerings and support for both agents and consumers.”
Avenue 8’s funding round is its second in six months: It raised a $4 million seed round last December. According to Martin, the Series A resulted from a preemptive offer from investors.
The round was co-led by Craft Ventures and Threshold Ventures, whose team previously backed companies including AngelList and Redfin. Prior investors Zigg Capital and Good Friends also participated.
In addition to geographic expansion, Avenue 8 aims to use the funding to build tools for agents and consumers, including the ability to do digital closings. The firm said it offers agents “end-to-end support” to help clients buy and sell real estate.
Even before the pandemic struck, investors were pumping money into residential brokerages, but it’s accelerated over the past year. In March, Side raised $150 million in a round that valued the firm at $1 billion. Last month, Compass raised $450 million in a long-awaited IPO.
Unlike Side, which is a white-label brokerage that provides services to top-tier agents, Avenue 8 is building a consumer-facing brand. Instead of a traditional commission model, Avenue 8 charges a fixed transaction fee. The fee varies by market, according to Martin; in the Bay Area, for example, it works out to a roughly 92 percent split.
Avenue 8 can afford to let agents keep more of the commission because of its “lightweight and efficient” model, Fichelson said. The brokerage offers agents a combination of tools built in-house as well as third-party products.
“There’s a rich ecosystem of APIs available today that simply didn’t exist in 2012 or even 2015,” Martin said.
By 2022, the firm aims to have “thousands” of agents. To date, Avenue 8 said agents have closed a “couple hundred” deals, at an average price point of $1.3 million.
Historically, New York has been a tough market to crack because of complexities like its co-op housing stock and lack of multiple listing service. Fichelson said Avenue 8 wants to tackle the challenge early.
“It’s hard to launch an operation from Dallas and then enter New York,” he said. “We think it needs to be disrupted. We want to take it on.”