Real estate tech start-up Sunroom Rentals, which rents units on behalf of property managers and apartment owners, has raised $ 11 million in a Series A funding round led by Gigafund.
Ben Doherty and Zachary Maurais, former founders of the Favor delivery app, launched Sunroom in May 2018 with the mission of ‘boosting profitability’ for mid-size property managers and apartment owners by giving them a way to outsource their rental operations.
The couple sold Faveur to Texan grocer HEB in 2018 and quickly focused on building Sunroom. The Austin-based company has developed an app that it says gives tenants a way to visit, apply for and rent a unit “completely online.” COVID-19 has led more and more tenants to want virtual ways to explore and secure rental housing. Mobile first, noted Maurais, is particularly appealing to millennials and millennials.
“Personally, we love to create products that meet the most basic needs of consumers,” said Maurais, president of the company. “With food under our belt, we decided to focus on housing.”
While it is questionable what the parallels between food delivery and housing might be beyond meeting consumer needs, CEO Doherty said the rental market in 2021 looks a lot like the market in food delivery in 2013.
“By 2013, Grubhub had successfully brought a lot of restaurant menus online, but most of the transactions and the delivery process were still offline,” he told TechCrunch. “We are in a similar position with the rental market, as the majority of rental listings are online, but touring, applying or renting units is still done offline.”
Since launching, Sunroom Rentals has signed over 2,000 leases and has had over 100,000 tenants sign up for its services in fast-growing Austin, where it focused its initial efforts.
“According to the US census, this represents about 10% of the tenants of the large Austin metro,” Maurais said. “Instead of going shallow and broad at the national level, we decided to go deeper into the markets, in an effort to achieve network effects, which was a strategy that worked well for us at Favor. “
Sunroom Rentals says it rents units five days faster than the market average. This benefits property managers, Doherty said, because they can grow faster “while improving rental performance.”
Going forward, the company will use the funding to expand across Texas, including Houston, San Antonio, and Dallas. It will also invest in its partner portal, which aims to give property owners and managers a way to visualize rental performance data in real time.
Sunroom Rentals currently has 18 employees with the goal of more than doubling its workforce this year. It is particularly looking to recruit in its engineering, product and sales departments.
As mentioned above, Gigafund led the Series A funding, which included participation from NextGen Venture Partners, Calpoly Ventures, and numerous angel investors including Gokul Rajaram (Google & Square) and Tim Heyl of Homeward, among others. . Existing funders include Founders Fund Seed, Draper Associates, Boost VC, and Capital Factory (among others). The round marked Sunroom’s first “rated” round, meaning the first time he has given up on the stock.
Jonathan Basset, managing partner of NextGen Venture Partners, believes Sunroom was essentially in the right place at the right time and “trendy with contactless rental even before COVID hit.”
“I watched them build a profitable consumer market in a competitive market with Favor and was impressed with them as operators,” he said. “These companies have a surprising number of similarities and I have no doubts that they can meet the challenge.
Last week, TechCrunch reported on the rise of another startup operating in this increasingly crowded space. Seattle-based Knock, a company that has developed tools to give property management companies a competitive edge, has raised $ 20 million in a growth funding round led by Fifth Wall Ventures.
Knock’s goal is to provide CRM tools to modernize the front office operations of these companies so they can do things like offer virtual tours and communicate with tenants via text, email, or social media from a “single conversation screen”. For tenants, it provides an easier way to communicate and engage with landlords.
Maurais said the two differ in that Knock is a CRM designed for leasing agents with a SAAS model whereas Sunroom is a marketplace, where tenants match, visit and apply with partnered properties.
“Sunroom also provides a suite of rental and analytics software to its partners and generates both transaction and subscription revenue,” he added.