Best/Worse Timed Investment Ever: ActiveRain

Tough call whether today’s announcement of a $2.75-million investment in ActiveRain, a real estate social network — and here I thought that was my local Starbucks, which is filled with idle real estate reps — is the best or worst venture investment in some time.

Let’s pit the arguments against one another:

Best: It’s a great bottom call in a beaten and neglected sector. They must have gotten it done for a great price, and where else can real estate go from here but up?

Worst: Real estate is in the tank and likely to stay there for some time. Venture capitalists are atrocious market timers, and this is, if anything, a sign things are going to get worse. Further, building a social network for real estate agents is like building one for residents of a rapidly southward-drifting ice floe.

I give a hat-tip to Worst, especially given that the deal was done by some real estate roll-up outfit, but I’m open to arguments. A little.

Related posts:

  1. Venture Capital Investment in India
  2. Hedge Funds: November 2007 Worse Than August
  3. Google Trends: Vancouver and the Real Estate Bubble
  4. Google Trends on the Real Estate Crash
  5. E-Trade: Citadel Investment Analysis, Part I

Comments

  1. Steadb says:

    Maybe a good bet if you are monetizing the site by education or job lead gen.

  2. Ah, good call. Maybe it’s all a traffic play for another portfolio employment site :-)

  3. USD Law Student says:

    We will NOT see a bottom to the real estate market AT LEAST until August, after the summer doldrums. Probably not until next January, after the new president is inaugurated, and maybe not for another two years.

  4. Joe Zekas says:

    Horrible call.
    AR is a cesspool that houses mostly bottom-of-the-barrel agents. For a variety of reasons, including rampant fair housing violations and numerous unlicensed agents participating, the elite real estate agents have shunned this site completely.

  5. mike says:

    HouseValues is a web 1.0 real estate lead-gen company. They’re getting killed. Crushed. Yes by a lousy RE market, but moreso by a cratering lead-gen market. The web 2.0 competition is adsensing lead gen. But: HV has some cash left over from the boom. If they’re going to survive, they have to figure out how to make it work.
    ActiveRain is a niche social network with very strong traffic growth and a several interesting properties. They’ve executed on a shoestring so far.
    So for a couple million bucks they an option on a future lifeline. Easy decision.
    No, my friend, your argument implies that the dumb money in this sector has put $90 million into Zillow, where market caps comps are barely $100 million.