Vacasa Founder Knocks Pacaso's Fundraising as Deceptive

05.10.2024 - 19:31 / skift.com / Dennis Schaal

It’s rare for one founder to publicly disparage another company’s effort to raise funding. But Vacasa founder Eric Breon took to LinkedIn this week to say Pacaso’s current effort to raise money “disgusts” him and “seems designed to deceive.”

Pacaso is a real estate company that enables people to invest in luxury vacation rentals through fractional ownership. Breon’s comments were in response to Pacaso’s announcement that it was enabling individuals to invest in the private equity-backed company with minimum investments of $1,000 plus a 3.5% fee.

Such fundraises in private companies are usually closed to the public.

Pacaso, which has total equity financing of more than $230 million, is seeking to raise another $75 million.

“I rarely comment on LinkedIn, but this disgusts me,” wrote Breon, who left Vacasa in early 2020. Vacasa and Pacaso aren’t direct competitors. Vacasa manages vacation rentals, Pacasa has more of a real estate investment bent.

Breon took issue with the way Pacaso promoted its financial results to potential investors.

“The gross profit chart shows $29M in ’21, $82M in ’22, and $95M in ’23,” Breon wrote. “This makes it look like 16% growth YOY (which isn’t that impressive) – but as this chart is cumulative, the real story is far worse: gross profit was $29M in ’21, $44M in ’22, and only $15M in ’23 – a 66% YOY decline.”

Breon wrote that the offering is “uniquely unfavorable” to retail investors because they wouldn’t receive any returns until the prior private equity investors recoup all of their investments.

Pacaso co-founder Spencer Rascoff, who also co-founded Zillow, had written in his own LinkedIn post that the Pacaso offering gives “everyone the chance to invest in innovative companies, not just big VCs.” He wrote that he regretted that when Zillow went public in 2011 that there wasn’t “early investment opportunities to retail investors.”

Breon countered: “Or maybe the big VCs have no interest in investing in a company that loses tens of millions annually as revenues plummet.”

When contacted about Breon’s LinkedIn post about Pacaso, spokesperson Chrissy Bruchey replied via email:

Founded in 2020, Pacaso is backed by Maveron, Softbank, Greycroft and Fifth Wall, among others.