Pacaso, a real estate company that allows individuals to invest in luxury vacation rentals through fractional ownership, has come under scrutiny from Vacasa founder Eric Breon. Breon publicly criticized Pacaso’s current fundraising efforts, calling them deceptive and describing them as designed to deceive potential investors. Pacaso is currently seeking to raise an additional $75 million, on top of the $230 million it has already raised in total equity financing. The company is offering individuals the opportunity to invest in the private equity-backed company with minimum investments of $1,000 plus a 3.5% fee, a move that Breon finds distasteful.
Breon took issue with the way Pacaso presented its financial results to potential investors, specifically calling out the misleading nature of a cumulative growth chart that made it appear as though the company was experiencing steady growth, when in reality, there was a significant year-over-year decline in gross profit. Additionally, Breon criticized the offering for being unfavorable to retail investors, as they would not see any returns until the prior private equity investors recouped all of their investments. Pacaso co-founder Spencer Rascoff defended the offering, stating that it gives everyone the chance to invest in innovative companies, not just big venture capitalists.
In response to Breon’s criticisms, Pacaso spokesperson Chrissy Bruchey defended the company’s marketing tactics, stating that using cumulative growth numbers in investor decks is standard practice to illustrate the long-term scale and impact of the company’s operations. Bruchey also addressed the decline in gross profits in 2023, attributing it to the post-Covid real estate slowdown and the company’s decision to prioritize profitability over growth by implementing cost-reduction initiatives. She clarified that prior investors would only have priority in recouping their investments in the event of a liquidity event that yielded less than their original investments.
Despite the controversy surrounding its fundraising efforts, Pacaso remains confident in its mission to democratize access to investment opportunities and provide everyone with the chance to invest in innovative companies. The company is backed by reputable investors such as Maveron, Softbank, Greycroft, and Fifth Wall, among others. Pacaso believes that opening up investments to individual investors is essential to its core mission and firmly believes in providing everyone with the opportunity to invest in innovative companies, not just large venture capital firms.
