Side, a white-label back-office support system for real estate agents, just raised $150 million to fuel expansion. With a competitive market for not only homebuyers but agents as well, could this be a solution to set entrepreneurial agents apart?
The deal was led by Coatue Management and gives Side a $1 billion valuation. In total, Side has now raised $200 million.
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Side, a proptech start-up based in San Francisco, has built a customized technology platform for residential and commercial real estate agents. Side essentially flips the broker-agent model on its head.
Large brokerage firms like Remax (NYSE: RMAX) or Coldwell Banker (NYSE: RLGY) give new agents a brand to leverage as they build a book of business. However, if you ask Side, successful agents that have their own solid book of business end up giving too much of their personal brand back to the corporate brand.
Side gives agents the opportunity to take their own personal book of business and brand to branch out on their own. Senior Managing Director at Coatue Rahul Kishore said that Side enables entrepreneurial-minded agents to grow their own businesses “instead of having to manage paperwork.”
Compare this to another tech-enabled brokerage, Compass (which is going public), whose logo and brand are prominently placed amongst its agents. General Partner at Trinity Ventures and Side Board Member Patricia Nakache promised, “You will never see the Side logo” — hence the “white-label” status.
A model like this seems to be right in line with where other industries have headed in terms of influencer marketing. If an agent in a particular market gains incredible traction, builds a book, and generates a social media presence, why shouldn’t they be able to build a business around themselves? To that point, Nakache explained, “The real estate market is kind of ripe for change and innovation.”
Side makes money by taking a cut on each transaction. Side Chief Executive Officer Guy Gal said he sees rival brokerages as the old business model, while Side’s approach is more appealing to top-performing agents. He added that the average annual sales volume is $45 million for Side users.
The bottom line: a way for agents to stand out
As it’s been widely reported, there arefar more agents in the U.S. than there are homes for sale. Agents need to stand out to get listings and represent buyers. A solution like Side is worth exploring for people with existing brand equity or those who are social media savvy.