Mike Rogoway The Oregonian
Oregon hasn’t produced a really big company in more than two decades.
There have been many contenders during that time, among them tech aspirants Jive Software, Integra Telecom, Puppet, Pixelworks and Viewpoint Construction Software.
All ran into stumbling blocks along the way, or sold before they had a chance to grow genuinely large. That’s left the state with a dwindling number of aging, Oregon-based companies as corporations die off, sell or move out of state.
Portland vacation rental management company Vacasa will now have the opportunity to break Oregon’s losing streak. The company said Tuesday it has raised $319 million in new funding, with investors valuing Vacasa at more than $1 billion.
The investment was led by Silicon Valley private equity firm Silver Lake, known for participating in leveraged buyouts such as the $24 billion deal that took Dell private five years ago. Vacasa did not disclose what level of debt accompanied Tuesday’s deal.
It also underscores the enormous potential major investors see in the Portland company — and the intense pressure Vacasa will face to deliver on that promise.
Founded in 2009, Vacasa provides cleaning and maintenance services to owners’ vacation properties and lists their properties online. It uses technology to dynamically adjust rental pricing online based on market demand, aiming to get the most for the property owners — while taking a cut for itself.
Vacasa has been growing rapidly, fueled by more than $200 million in prior investment and this year’s $162 million acquisition of Wyndham Destinations’ own vacation rental business. In Central Oregon, Vacasa bought vacation rental management company Discover Sunriver in 2016 and Carefree Vacation Rentals, which handled vacation rentals around Eagle Crest, in 2015.
Privately held Vacasa doesn’t disclose detailed financial results but says it now manages 23,000 vacation homes and has grown revenue sevenfold in the past four years. The company said it expects more than $1 billion in gross bookings and more than $500 million in revenue by July.
“The opportunity that lies ahead of us is enormous, both on the property management and real estate side of the business,” Eric Breon, Vacasa’s founder and CEO, said in a written statement.
Formerly an Oregon business analyst, Breon says he started Vacasa because he had difficulty locating a rental management company for a vacation cabin his wife’s family owned on the Washington Coast. Breon, 41, thought a new company could do better by adopting technology to track maintenance and cleaning and using algorithms to adapt prices to market demand.
The company now employs 5,000 altogether, including 379 at its corporate headquarters in the Pearl District. Most of its staff works in the field, maintaining, cleaning and managing properties from Long Island to Lincoln City.
Silver Lake managing director Joerg Adams said in a written statement Tuesday that his firm believes Vacasa “has the potential to become a global brand.”
With Tuesday’s funding Vacasa said it will focus on continued expansion, not just in big U.S. vacation markets but in Canada, Mexico and the Caribbean. Vacasa said it will also try to expand its new real estate business, which provides market and financial data to property buyers and sellers.
Vacasa is now among the best-funded young companies in Oregon history. The company has made it clear it plans an initial public offering of Vacasa stock, though the company has given no indication of its timetable.
No Oregon company has held a significant IPO since 2004, when Cascade Microtech and McCormick & Schmick’s each went public. Both companies struggled in the public markets, though, and sold to larger companies.
Oregon’s recent business history is filled with such cautionary tales. Consider Integra Telecom, which took on $1.3 billion in debt in hopes of capitalizing on the rapidly growing market for internet services. Integra floundered when its growth evaporated in a competitive market, then wilted under massive debt.
Others, like Portland tech upstart Jive Software, were undone by investors’ demands for outsized growth.
Positioned between the roaring entrepreneurial communities in San Francisco and Seattle, and stifled by the absence of large research universities and local investment pools, Oregon has rarely been a destination for the most ambitious entrepreneurs.
Recent startups have tended to focus on less competitive, niche markets and are easily rolled into larger organizations with broader portfolios.
The absence of locally based companies hasn’t crippled Oregon’s economy, which is enjoying one of its longest expansions on record and exceptional growth in personal income. During that period, though, the state has become increasingly reliant on out-of-state employers who use Oregon as a low-cost outpost.
That’s been a persistent worry to economists, who warn outposts usually perform the ancillary corporate functions that are most likely to be cut to save costs or respond to a market or economic downturn. Just Monday, onetime Portland startup Sightbox notified Oregon officials it will lay off 50 employees — two years after its sale to Johnson & Johnson.
Tuesday’s funding makes Vacasa the state’s best chance to develop a new, homegrown company to help anchor Oregon’s economy and to nurture a new generation of employees and executives to lead future businesses.