In a move the firm said will help it gain market share, real estate platform OJO Labs has sold its Canadian operation, OJO Canada, to the Royal Bank of Canada, according to an announcement on Tuesday.
While the financial terms of the deal are not being disclosed, according to the firm’s CEO John Berkowitz, the OJO Canada sale — plus a fresh round of debt funding from the credit arm of Vista Equity Partners — has a combined worth of nearly $200 million.
“We have been working with them for several years, really recognizing each other’s superpowers and doing really special things together,” Berkowitz said. “It was evident earlier last year that we had kind of proven all of our theses and that both companies wanted to go all in, and all the way, and we thought it would be most effective to have them be able to own the entire platform in Canada and be able to own its destiny.”
In 2018, OJO began partnering with Royal Bank of Canada, which is the nation’s largest mortgage lender, to test production innovations in the Canadian market. The two firms expanded their partnership in 2021 with the launch of OJO Canada, a Canadian real estate platform.
“OJO Canada offers a powerful real estate platform that serves as a comprehensive one-stop hub for Canadian home buyers who are looking for a simpler, integrated experience in this fragmented market,” Sid Paquette, the head of RBCx, said in a statement. “We’re excited to bring OJO Canada into the broader RBCx portfolio of ventures and look forward to building upon the platform’s unique capabilities. In doing so, we remain focused on deepening our relationship with Canadian home buyers and real estate industry professionals, and delivering value-added experiences that eliminate pain points across their complete home buying journey.”
According to Berkowitz, 96 of the firm’s employees will make the transition with OJO Canada to Royal Bank of Canada, as will OJO Holdings CMO Karen Starns, who has been named CEO of OJO Canada. Berkowitz will also remain as an advisor to OJO Canada’s board.
OJO Canada will still maintain office space in Austin, Texas, where OJO Holdings Corp is based, in addition to its offices in Toronto.
This is OJO’s first major fundraising effort since 2020, when the firm raised $62.5 million in a funding round led by Wafra, a firm backed by a Kuwaiti sovereign wealth fund.
“April 2020 was our last fundraising round and we also bought Movoto,” Berkowitz said. “It is hard to think back on that time when the real estate industry was frozen and people were thinking maybe real estate is done for a while. We, on the contrary, had been staring at the data thinking about what might happen, and we had opinions on and plans for COVID as early as January. So by April, we were ready to pounce on the opportunity and move really fast, and that gave us the ability to leapfrog in the industry. We are now back to what feels like very similar time — and those who were enjoying the good times and not thinking about changes are having to retrench and do massive layoffs and are not able to gain ground. But because we have put all thing work in, we are able to use this as an opportunity.”
The opportunity Berkowitz sees for OJO comes at a time when things are heating up in the real estate listing platform space.
In late January, commercial real estate giant CoStar announced that it was in talks to acquire Realtor.com parent firm Move Inc. from Rupert Murdoch’s News Corp. According to a report, the deal values Move at $3 billion, a number Zillow co-founder Spencer Rascoff called “a little low.” CoStar’s current market cap of $30 billion is larger than Zillow’s.
Berkowitz said he plans to use these funds to further differentiate OJO from the other platforms. (OJO currently provides users tools to track the value of their home and stay on top of home maintenance work, in addition to its home search functionality, unlike Zillow and Realtor.com.)
“The majority of the focus of our business over the next six months is doubling down on our relationships with real estate agents and real estate teams,” Berkowitz said. “I am proud of the fact that really, what our job is, is to give data and information to consumers, and when they are comfortable, they raise their hand and say that they need human help. We then provide the experiences and technology, and the right real estate agent for them, to get them through their journey. We just have to keep making that better for our real estate partners and making that relationship between the agent and the consumer more successful — and that is what the majority of this capital will go to.”