Junior Bankers Shared ‘Painful’ Time Before $2.2 Billion Startup

(Bloomberg) -- Mate Pencz met Florian Hagenbuch in 2008, when they were both junior bankers at Goldman Sachs Group Inc. in New York. Their brief, but grueling stint, as Pencz described, brought them closer and ultimately led to the creation of a $2.2 billion real-estate startup in Brazil.

“We met at Goldman and commiserated over the experience so we ended up becoming friends,” Pencz said in an interview. “You learn a lot, but it was quite painful.”

Pencz and Hagenbuch, both 34, are the founders and co-CEOs of Loft Brasil Tecnologia Ltda, a firm that buys and sells homes using e-commerce-like tools in Brazil. The company raised $425 million in a funding round led by D1 Capital Partners, making it one of Latin America’s most valuable startups. The fundraising attracted new investors such as Advent International, Canada Pension Plan Investment Board and Singapore’s GIC Pte.

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“This round was about getting some public-market investor expertise on the company,” Pencz said. “We do have the goal of going public and most of this round’s investors are hoping for an IPO.”

Loft is among Latin American businesses that got a boost from lockdowns, as Brazil became a hot spot for Covid-19 cases and now leads the world in new infections. As policymakers slashed interest rates to revive the economy, mortgages ended up becoming cheaper than ever. At the same time, people stuck at home started looking for new places to live, Pencz said.

“Mortgages got almost 30% cheaper but house prices didn’t follow. People are seizing the opportunity to move,” he said.

Growth Plans

Loft, which lists about 15,000 properties in Sao Paulo and Rio de Janeiro, could hit 10 times that in the next year or so, said Pencz. The firm is planning to expand into other major cities both inside and outside Brazil.

The founders still control Loft’s voting rights after the latest round, according to Pencz. The firm has raised about $700 million in equity since inception, with investment firm Andreessen Horowitz one of its earliest backers.

Neither man is Brazilian, though Hagenbuch grew up in the nation. Pencz was born in Budapest, and after the Goldman stint in New York, he moved to London, where he and Hagenbuch were roommates. They worked at private equity and hedge fund firms and made a pact that when one decided to quit his job, the other would follow and they’d start a business in Brazil.

“We wanted to do it in a market that seemed less disrupted but that was still welcoming to foreigners,” Pencz said. “The next week I had quit my job and Florian thought I was joking.“

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