Durham startup First, which uses machine learning, data science and AI to help real estate agents sell more houses, has found a new home of its own. Denver-based real estate giant RE/MAX has acquired First, with plans (for now at least) to keep the product, brand and team in place in the Bull City.
The terms of the deal weren’t disclosed—are they ever?—but First’s Co-Founder and CEO Mike Schneider is clearly declaring victory, and with good reason.
“It’s a win for all the investors and employees, which isn’t always something you can say with exits,” said Schneider. “We think it’s a great outcome, and it definitely was not something we were forced to do. We had multiple offers, but with RE/MAX we felt there was a strategic and cultural alignment—plus they have a huge network.”
Schneider also wrote a first-person piece in the RE/MAX in-house magazine explaining his reasoning for the deal.
First launched in 2016 and used to be known as First Leads, because its initial focus was trying to provide better leads for real estate agents by analyzing public data to better predict ahead of time who might be selling their house.
Over time, First tweaked its aim—and its name—to integrate with an agent’s contacts lists and perform its predictive magic conveniently within that defined universe. That has proved both more user-friendly and useful because most sales arise out of a pre-existing relationship. Therefore the trick for an agent is more about knowing who in their extended network to target, and when, than knowing if a total stranger might be putting their house on the market.
Durham’s IDEA Fund Partners led First’s seed round and participated in the $5M+ Series A last May led by Chicago’s MATH Ventures. In all, First has raised a little more than $10M.
As more and more brokers began to use and like First’s offerings, word began to filter up to the corporate offices of the big real estate brokerage companies they worked for. That led to significant inbound interest for a potential acquisition, so much so that in July, First’s board decided to explore those options. RE/MAX and CEO Adam Contos ended up being the best fit.
“We have set our sights on becoming the global leader in real estate technology, and the acquisition of First is evidence of that steadfast commitment,” said Contos. “With First, we found next-level talent combined with a game-changing service, delivering exclusive access to one of the best products for agents out there today.”
While First’s current non-RE/MAX customers can keep using the product until their contracts expire or until the end of 2020, going forward it will only be available to RE/MAX agents. Though that’s a huge pool—some 125K+ agents in more than 110 countries, compared to the several thousand agents who currently use First. RE/MAX’s agents already close an average of 16.3 “sides” per agent (a “side” meaning representing either a buyer or seller in a given transaction), nearly 60 percent better than for any competitor.
RE/MAX will be investing additional resources in First to help meet that need, which will likely mean added growth for the company in Durham. You can add that “win” to the financial victories collected by the company’s founders, employees and investors, including Durham’s IDEA Fund Partners.
First has arrived at this successful exit fairly quickly in big-picture terms, though that’s a lot easier to say when you haven’t been on the roller coaster that is startup life—even at an ultimately successful startup—for the entire ride.
“The real estate space is challenging and the company had to pivot a couple of times along the way,” said Lister Delgado, who led IDEA Fund’s investment. “But, over the last few years, First has found product/market fit, and have built a great solution that really addresses the needs of real estate agents. IDEA Fund Partners has been an investor in First since its earliest days and we could not be happier for the company and for our investors.”