ActiveRain Finds Funding
ActiveRain, the popular social network/blogging platform for real estate professionals, announced today it has received $2.75 million in funding (see the official post on their site).
In a move that may raise some eyebrows, the money came from fellow Seattle venture HouseValues.com in exchange for a minority stake in the company.
I had a chance to talk to ActiveRain’s founders Jon Washburn and Matt Heaton earlier however, and both are pretty excited about the cash infusion. As they put it, they’ve been “bootstrapping” ActiveRain for the last couple of years and the new dollars mean they can finally begin to focus on building their team to really ramp up development on the site. They plan on using the bulk of the money to hire new engineers.
First priority for them is to launch the outside blogging platform (see ActiveRain Launches Outside Blogs) and finish an overhaul on Localism, their consumer facing local market commentary site.
More importantly, Washburn and Heaton see this money as being a critical hedge against the other VC-backed players that are starting to edge onto ActiveRain’s turf. Zillow and Trulia (with its new Agent2Agent product) have all recently started to try and corner real estate agents’ conversations online.
In any case, news of the funding announcement certainly begins to clear up many of the nagging questions around ActiveRain’s long-term viability. Though it had started to monetize the community a little, mainly through advertising, profitability remained a long way’s off - and is still at least 12 months away, according to Heaton and Washburn. This funding gives them the breathing room they need.
Neither of the founders would comment on how the investment affects ActiveRain’s ongoing lawsuit against Move.com (see Move.com Tried to Buy ActiveRain).
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Bob Carney | Jan 21, 2008 | Reply
I am glad to see some funding that would help this community. I believe it has been running on autopilot for too long and needs some new ideas. However, I am not a fan of HouseValues. I don’t like to how agents are raped out of their money for “leads” I just hope that they continue to keep the community free and foster an effective networking platform.
Teresa Boardman | Jan 21, 2008 | Reply
My eye brows are raised.
Matt Heaton | Jan 21, 2008 | Reply
Bob, yeah the community will remain free. This investment is structured much in the same way a VC might have invested in the company. It’s a financial deal that gives us the capital to execute on the business plan and revenue models we’ve envisioned for a while.
Matt Heaton | Jan 21, 2008 | Reply
There’s a good thread on this on our official announcement at http://activerain.com/blogsview/346254/ActiveRain-secures-2-75
I did try to answer a few of the questions which seemed fairly obvious.
HouseValues is a lead generation company, doesn’t that conflict with ActiveRain?
ActiveRain and HouseValues are seperate companies. ActiveRain will continue to execute against the same business models we’ve planned on all along; for example selling services such as “Outside Blogs” and generating revenue from advertising. We have no plans to be a lead generation company.
Did ActiveRain give HouseValues access to member data or content?
No, this deal does not give HouseValues access to member data or content. Member content remains and always will remain the property of the individual member.
Will ActiveRain remain free?
In one word, yes…
Are we giving up control or bailing?
The founders still retain majority control of the company. In regards to bailing, Jonathan and I have never been more excited about ActiveRain, as this investment gives us the monetary resources we need to accomplish our goals.
Will HouseValues name be all over the site or will we be marketing their products?
This deal did not include a marketing component. Housevalues may purchase advertisement in the same way as other vendors can on the site.
Jay Thompson | Jan 21, 2008 | Reply
Interesting… HV stock is at what, less than $3/share? They are losing customers by the boat load. To be honest, I’m surprised they had a spare $3M lying around. If I were at AR, I’d *run* to the bank before the check bounces!
Best of luck to the AR guys though. They are top notch folk!!
Maureen M | Jan 21, 2008 | Reply
“the popular social network/blogging platform” shhh you could scare some of the users referring to ActiveRain as a social network.
I’m not a fan of HouseValues but I am glad the owners got financing that they are comfortable with.
Maureen Francis | Jan 21, 2008 | Reply
Not a fan of HouseValues either, but I certainly hope this helps AR.
andrew | Jan 21, 2008 | Reply
$2.75 mill isn’t a whole lot of funding, but it should be able to help upgrade Localism. Congrats to the founders and good luck.
jdquicksand | Jan 21, 2008 | Reply
Jay - Stick to real estate. HouseValues has over $70 million in cash laying around. This is public information. You can find it by reading their balance sheet on Yahoo, Google, or their SEC filings. It’s been laying around for years. The stock price represents all that cash as the HV business is worth nothing.
Dave Weiss | Jan 21, 2008 | Reply
Thank goodness.
I can sleep tonight now.
Greg Nino | Jan 22, 2008 | Reply
Hi Everyone,
House Values or any other lead generation company is the current future. In case anyone needs to be reminded, the Internet is where prospects turn into dollars and sense. A lead that comes from your computer or how it gets in you contact management system is a mute point. What does matter is that House Values has been instrumental in launching careers for some and sadly not able to spoil others.
I have concern for anyone outside my market who claims Internet leads are either a waste of time or a waste of money. Effort being left out because that is what usually is for the typical naysayer. If your in my market carry on with your thoughts. I would be happy to buy your subscription.
I’ve been with House Values since January of 2006. Simply said, I’ve received over 2,000 leads that have given birth to my business, future and lifestyle. I have picked up over 80 transactions and $300,000 in total commissions. I average 3.5 listings a month and expect no slow down in sight. I have also enjoyed countless opportunities to grow, learn and develop as a practitioner in my market. I can also thank House Values for helping me be the Top Listing agent for 15 months in a row in my office.
I am very excited and glad they are financially involved with Active Rain.
Ruthmarie Hicks | Feb 5, 2008 | Reply
Greg,
I don’t buy it. If you are such a big shot, you should be able to generate all those leads yourself. Why pay them to give you an email address like donald.duck@gmail.com? I will not pay for someone to slap up a site, delude the public that they are sending them to “top agents” (more like desperate agents) while they sit on their asses and collect fat fees giving me a years worth of leg-work and hand-holding to deal with. I’ll work on my own SEO and web presence and collect those leads MYSELF. I don’t PAY for leads - not ONE PENNY.