Startups that want to make it easier for people to rent flexible, short-term apartments are getting some credit for the rise of remote work. Last week DelBook reported that Flow, a flexible living startup founded by WeWork co-founder Adam Neumann, closed $350 million from Andreessen Horowitz. Earlier today, TechCrunch reported that online rental marketplace Zumper has raised $30 million in Series D1 funding led by Kleiner Perkins to better serve people looking for short-term rental options.
Now, The Landing, a startup that allows customers to rent fully furnished apartments on its platform for a month at a time, also says it has received new funding: $75 million in equity funding and another $50 million. million in debt.
Delta-V Capital led the equity round, joined by new and existing investors including Greycroft and Foundry. Landing has now raised $237 million in venture funding and $230 million in debt since launching in 2019.
Last week we told you a little bit about Landing founder Bill Smith, a serial entrepreneur who’s been dubbed the “anti-Adam Neuman” because he’s decidedly low-key, conservative when it comes to raising venture capital, and has only taken investors out of his past two companies. (Neumann, by comparison, is a powerful personality, and on WeWork’s path to becoming a publicly traded company last year, not everyone came forward.)
The company works like this: Using pricing and demand data from around the country, it zeroes in on multifamily buildings around the U.S. through performance marketing and referrals, then finds tenants for these apartments, signs one-year leases itself, then quickly sells everything from furniture to rent. Moving goods. (Restaurant) All of this furniture is manufactured in Vietnam and shipped to warehouses in Austin, Phoenix and Alabama, where it is based.
Tenants who sign on as lodging “members” for a $199 annual fee promise to rent from the prison for at least six months, although they are allowed to move freely to other lodging-operated apartments during that time, as long as they give the company two weeks’ notice. Smith says they currently stay in one place for an average of six months.
Currently, the Landing – a non-profit – makes money by marking up more than 40% of what it pays in rent. Ultimately, Smith told us last week that Landing plans to sell the software directly to multifamily property owners. “Over time, we’ll work with owners to bring this product to their building, and it really won’t be a ‘landing’ lease product,” he said. “You just join the Landing stage. They work using our technologies and standards. And, and the model of this won’t be, you know, Landing leases and is committed to that lease.
Based on this week’s “inside” story about Flow on Real Estate Selling Real Estate, it looks like Flow is building it. According to the outlet’s sources, Flow is effectively a service that landlords hire to make their property more attractive to people looking to visit, but with a consistent, branded experience.
Like the Landing, shorter lease terms and an influx of furnished apartments allow it to command higher rents, according to The Real Deal.
Unlike the Landing, Flow itself owns at least some of the multifamily units its members move into. In fact, with his substantial WeWork income, Neumann has amassed more than 3,000 apartments in Dealbook, Miami, Fort Lauderdale, Atlanta and Nashville. It can give an additional benefit to the dress. According to Real Deal, Flow Buildings can “use more affordable financing.” . . Because banks can provide loans for the properties at the same point of consumption or up to 80 percent offered for apartment projects. These are more favorable conditions than the 55 percent typically offered for hotel development, essentially creating a low-cost, high-yielding business.
Flow, Landing, and Zumper are not the only possibilities for surveillance in dynamic living. Last fall, Zeus Living, which focuses on giving people “flexible living” options, raised $55 million in a round led by SIG. BlueGround, a pre-owned apartment rental startup that specializes in short-term and long-term rentals, meanwhile, raised $180 million in equity and debt funding last September. Another tech-backed plasmamaker raised $90 million separately from investors in March.
Another dynamic company is Central, whose 3,000-plus properties are owned by Iconiq Capital, a San Francisco-based investment firm whose investors are Mark Zuckerberg and Reid Hoffman; Iconiq is also a major investor in Central, the WSJ reported last year.
Some companies in the space, including Sonder, which went public in a SPAC merger last year and cut a fifth of its workforce last month, have performed poorly, but expect more players to be backed by more capital. The restructuring is designed to shave $85 million off annual costs. (On customer-review platform Trustpilot, Sonder receives 1.3 out of five stars, with complaints about everything from a lack of hot water in the brand’s rooms to blood-stained linens.)
While the short-term rental business is complicated by its many moving parts, many individuals are experiencing nomadism due to the upheavals caused by the pandemic, and VCs love nothing more than industry flux.
“Our view is going to be more interesting,” Plasmaker’s CEO told The Real Deal. Institutionalization of an asset class does not occur by a single group.
