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If not for WeWork’s failed IPO, Mike Romanovich probably wouldn’t be building a proptech business today. The entrepreneur left his position as director of product management and strategic partnerships at the popular co-op company in January.
At the time, Romanovich detailed construction details on tiny houses — which he had started as a side hustle — earning him two thousand dollars a month. He doubled down on the idea by investing $10,000 of his own money – which he used to relaunch the business under the name Dan.
Den, which launched in July 2020, announced today that it has raised $3 million in venture capital in a round led by Getter Capital and Crosbeam Venture Partners. That’s far less capital than some of Den’s biggest competitors, including Atmos, which has raised nearly $20 million. Homebound, which grossed around $148 million; And welcome, it raised nearly $35 million.
However, Den’s founder is confident that their approach — and capital strategy — will help them win. While many proptech businesses require large capital infusions to build physical homes, Dan’s core product is a digital platform built on a more refined design and construction process. That means a customer can come to Den for help at every stage of construction, from getting a design to choosing the right land. Think less construction and more end-to-end project management.
In his view, there are two main categories of how housing is provided in the United States: custom housing, where an individual customizes every aspect of their home, or speculative housing, a turnkey home built by a developer that someone buys or has a goal in mind. By renting the place in future. The latter – a fully implemented house – requires a different level of capitalization, and the former, well, is incredibly expensive.
Den, meanwhile, wants to deliver a well-designed home with crystal-clear details and then hand-hold the homeowners through the process. Romanovich says that’s because very few people, even in an architectural firm, don’t fully define the dimensions of a house and allow too many decisions to be made after the process begins. “It creates a complex effect that increases time and cost and removes your ability to accurately define when a project will be finished,” he said. “People constantly promote prefabrication as a solution, but for us, we’re trying to think about the air defense details.”
Image Credits: of
Back to that financial round, however, Romanovich says that Denn deliberately wants to stay property light. Before raising any outside capital, the company was monetizing digital spec plans, which it described as high-margin asset-light products. He’s hoping that bootstrap thinking combined with a modest initial round will give the company an alternative to today’s economy.
“Let’s continue to be a beacon of wealth, because it’s a strategic advantage for us,” he said. “So our focus was on process, design, user experience, design intellectual property and the technology – which meant we could move quickly, we didn’t need to raise millions of dollars to build unique homes and sell them at market value like some people in the category.
Still, Dan doesn’t deny that he might one day get more into the acquisitions business. Monetization options down the road can range from monetization on property sales to acquisitions to financing and financial services from homeowners to builders, he said, around various types of insurance. “We have a lot of problems, challenges before we even scratch that itch.”
Today, the biggest obstacle is the “practical challenge of staying focused.” Fortunately, he thinks the market is ready for it.
There are large emerging groups from state to state that just need a better marketing and customer acquisition engine. “And that’s what we’re here to offer.”
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