Ideal Agent,— a real estate technology company, is launching its Series B in a couple of weeks, said Steve Johnston, founder and CEO.
The Tampa, Florida based real estate referral network has engaged a banker to assist with the USD 50m to USD 100m round, said Johnston, declining to name the firm.
Ideal Agent connects home sellers with top-rated agents at commission rates as low as two percent, according to Johnston. It has 3,500 agents on its referral platform, and it works with the top one percent of real estate agents in the US. The company, which expects annual recurring revenue (ARR) of more than USD 50m this year, sees an IPO potentially in 24 months when it expects to double its ARR to USD 100m, said Johnston.
Ideal Agent, which has raised USD 16m in debt and equity capital to date, expects to close the round by year-end or 1Q23, Johnston said. The company will consider both debt and equity for the upcoming round and it will sell a minority stake.
The funds will be used for Ideal Agent’s first acquisitions and expanding marketing, technology and its team, the CEO said. Technology-based buys that deepen its mortgage, title, property and insurance services would be a fit. It does not have a particular size or geographic requirement, Johnston said.
The company is seeing heightened deal flow as a result of the economic downturn, he said. Ideal Agent is poised to take advantage of M&A opportunities as real estate companies are struggling or not positioned to handle the market slowdown.
The company had also considered going public via a special purpose acquisition company (SPAC) but given SPAC market conditions, Ideal Agent decided to wait a couple of years for stock prices to improve and then make its public debut via an IPO, he explained.
The company is expanding its service offering with its title company that operates in 27 states, he said. It also is close to launching Ideal Rate, a mortgage broker; Ideal Offer, a cash offer service as well as property insurance and home warranty services. With uncertainty around interest rates and buyers unwilling to buy at the height of the market, ancillary services are important to make up for the downturn in home buying, he explained. Real estate time frames are going back to the pre-COVID-19 rate of 90 to 120 days before a house is sold as opposed to the home buying frenzy of 30 days during the pandemic, Johnston said.
Johnston founded Ideal Agent in 2016 after previously founding Home Discovery, a real estate brokerage firm that closed shop during the 2008 housing crash.
Trenam Law serves as Ideal Agent’s legal counsel.
by Rebecca Wenzel
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