Junior Bankers Shared ‘Pain’ Before $2.2 Billion Startup

Mate Pencz met Florian Hagenbuch in 2008, when they were both junior bankers at Goldman Sachs Group Inc. in New York. Their brief, but grueling stint, as Pencz described, brought them closer and ultimately led to the creation of a $2.2 billion real-estate startup in Brazil.

Junior Bankers Shared ‘Pain’ Before $2.2 Billion Startup

“We met at Goldman and commiserated over the experience so we ended up becoming friends,” Pencz said in an interview. “You learn a lot, but it was quite painful.”

Pencz and Hagenbuch, both 34, are the founders and co-CEOs of Loft Brasil Tecnologia Ltda, a firm that buys and sells homes using e-commerce-like tools in Brazil. The company raised $425 million in a funding round led by D1 Capital Partners, making it one of Latin America’s most valuable startups. The fundraising attracted new investors such as Advent International, Canada Pension Plan Investment Board and Singapore’s GIC Pte.

“This round was about getting some public-market investor expertise on the company,” Pencz said. “We do have the goal of going public and most of this round’s investors are hoping for an IPO.”

Loft is among Latin American businesses that got a boost from lockdowns, as Brazil became a hot spot for Covid-19 cases and now leads the world in new infections. As policymakers slashed interest rates to revive the economy, mortgages ended up becoming cheaper than ever. At the same time, people stuck at home started looking for new places to live, Pencz said.

“Mortgages got almost 30% cheaper but house prices didn’t follow. People are seizing the opportunity to move,” he said.

Growth Plans

Loft, which lists about 15,000 properties in Sao Paulo and Rio de Janeiro, could hit 10 times that in the next year or so, said Pencz. The firm intends to expand into major cities both inside and outside of Brazil and also plans on using proceeds of the latest round to make a “larger, more transformational M&A,” Pencz said.

Dan Sundheim, founder of D1 Capital, said in a statement that he was drawn to the firm partly because of the fragmented offline competition and the “accelerating shift of consumer preferences toward digital solutions.”

Residential real-estate transactions in Brazil are often carried through small, brick-and-mortar brokers, plagued with red tape. Thanks to a history of high interest rates, mortgages remain a fraction of all the loans in the nation.

The founders retain control of Loft’s voting rights after the latest round, according to Pencz. The company has raised about $700 million in equity since inception, with Andreessen Horowitz one of its earliest backers.

Neither man is Brazilian, though Hagenbuch grew up in the nation. Pencz was born in Budapest, and after the Goldman stint in New York, he moved to London, where he and Hagenbuch were roommates. They worked at private equity and hedge fund firms and made a pact that when one decided to quit his job, the other would follow and they’d start a business in Brazil.

“We wanted to do it in a market that seemed less disrupted but that was still welcoming to foreigners,” Pencz said. “The next week I had quit my job and Florian thought I was joking.“

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