This time the deal happens to be in the consumer arena, with Zillow agreeing to pay $16 million in cash for San Francisco-based rental search site HotPads. It marks the sixth acquisition for Zillow in less than two years, and follows the company’s recent agreement to gobble up Mortech (which was announced earlier this month).
HotPads, which raised $2.3 million in funding five years ago from Meakem Becker Venture Capital and others, attracted nearly 2.8 million unique visitors last month. (By comparison, Zillow now attracts about 36 million monthly unique visitors).
“This acquisition represents a significant step-change for Zillow Rentals, allowing us to dramatically increase the number of leads we send to landlords. HotPads has a younger, complementary and rental-focused audience. Now Zillow will become even more relevant to consumers at the beginning of their real estate life cycle,” said Zillow CEO Spencer Rascoff in a statement. “In addition, by acquiring an amazing engineering team, with a deep understanding of how people search for rentals and become tenants, we expect to accelerate our innovation and monetization of our rental marketplace.”
HotPads employs 19 people, and it will continue to operate in San Francisco where Zillow has a growing presence. It will be combined with Zillow’s rental business, which has also been growing in recent months, including the launch of a new rental marketplace in October and the purchase of San Francisco-based RentJuice in June for $40 million.
In an interview with GeekWire earlier this month, Rascoff said that they’ve evaluated more than 100 potential companies for acquisition in recent years.
“The nice thing about this category is that it has essentially been bereft of an acquirer for the last 10 to 15 years,” he said. “Zillow benefits from a pretty greenfield opportunity here in terms of M&A.”
The acquisition of HotPads comes as Zillow’s stock continues to slip. It has lost 30 percent of its value in the past three months, now trading at about $26 per share. That’s still above the $20 IPO price in July 2011. Zillow employed about 500 people at the end of September.