Knock, the fintech company on a mission to make all homebuyers Power Buyers is scrapping plans to go public and laying off nearly half its staff after a tumultuous year for property technology companies.
Knock, which pioneered a type of financing that gives homebuyers a leg-up in competitive markets, was on the verge of going public through a merger with a special purpose acquisition company last year, Chief Executive Officer Sean Black said.
Knock, which had hoped to go public at a $2-billion valuation, was left to lower its ambitions. The company is raising $70 million in a round led by Foundry Group.
Existing investors First American Financial and RRE Ventures joined the round, as did real estate executive Mauricio Umansky and filmmaker M. Night Shyamalan. Knock also raised $150 million in new debt.
Knock secures $220 million in new funding
The startup announced on March 16 that it had secured $220 million of new funding, including the first close on $70 million in equity and $150 million in new debt used to power its payments platform that helps customers finance their dream homes.
“This capital puts us on a solid foundation and a path to profitability by year-end to continue on our mission of revolutionizing the home buying experience for everyone,” said Co-Founder and CEO Sean Black.
The funding announcement comes nearly a year after Knock announced it hired Goldman Sachs to explore opportunities to take the company public at a valuation of $2 billion.
Knock turned to the private markets following a series of macroeconomic events that roiled financial markets that began with the SPAC market disintegrating and was followed by two COVID outbreaks, the implosion of Zillow Offers, a pullback of investors from the public markets due to inflationary fears and most recently Russia’s invasion of Ukraine.
Knock CEO repents layoffs in a Blog Post
Black chronicles the events that led to the announcement in this detailed post on his blog.
This decision will include a reduction of Knock’s workforce by approximately 46 percent. “While substantial, the capital we raised is much less than what we set out to raise in our IPO, requiring us to rightsize the business, including the difficult decision to part ways with a number of our beloved Knockstars,” said Sean Black
“Today’s announcement weighs heavily on us and me, in particular. These people worked tirelessly to make Knock the most simple, certain, convenient way of buying and selling a home. I am so incredibly proud of and grateful to them,” added Black.
In the last 12 months, the company achieved double- and triple-digit growth in transactions, revenue, and gross profit and grew nationwide from 14 to 70 markets. Knock entered five additional markets in and around Seattle in early 2022, expanding the company’s presence to 75 markets.