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Doorstead, a property management startup that offers “guaranteed” rental payments to homeowners, has raised $21.5 million in Series B funding.
Ryan Waliani and Jennifer Bronzo started Berstead in 2019, initially testing the model to set prices for rental properties on Craigslist. Over time, the company has built a pricing model through data science and machine learning, which the couple says gives it the ability to better predict how much a given property will command.
It doesn’t mean it works without risk. The two actors admit that guaranteeing rent to landlords is a risky experiment, given that Dorsted will have to cough up the difference if it doesn’t get the promised amount.
However, they say that their forecasting model works very well and will still go forward. Doorstead makes its money strictly by charging an 8% management fee, so it is discouraged from listing unrealistic or potentially fair properties for rent. So if the company manages to get more than the guaranteed rent, it doesn’t pocket the difference. Instead, that extra money goes to the property owner.
CEO Waliani told TechCrunch, “Other companies may take that side, but we believe the incentives are wrong.” “What we offer is market-based, risk-adjusted insurance.”
To claim a guaranteed offer, property owners enter basic information about their property on the Doorstead website. If the property qualifies, the company will tell the owner the minimum amount they will receive each month and when they will start receiving their payments.
COO Bronzo says, “If we rent the property for less, we make up the difference. [than the minimum] Or if it takes longer to find a tenant. So the owner still gets rent, and we pay the difference out of pocket, or 8% less.
Bear Steady targets “getting more than 75% of the original list price,” Waliani said.
“… It works very well for us financially, and it’s helping us eliminate unnecessary loopholes. Without collateral, sometimes asset managers drag their feet,” he said.
The model appears to be working, saying that it sees 270% asset growth by 2022 and that revenue will “outpace” asset growth with “healthy unit economics”. Doorstead says it has served “thousands” of owners over the years, generated more than 30,000 guaranteed rental offers and currently has more than $1 billion worth of properties under management. The startup operates in seven markets in California, Washington and Massachusetts.
Doorstead only works with owners of single-family homes, condominiums or townhomes, not institutional landlords.
Waliani previously worked in product at Uber and Bronzo has experience in asset management. The pair believe their combined backgrounds have given them a great perspective on how to run a tech-enabled, “full-service” asset management business and then some.
Image Credits: Co-Founders Ryan Waliany (CEO) and Jennifer Bronzo (COO) / Gatekeeper
“When we started, we thought, ‘We’re going to build a tech-enabled asset management company. We build for asset management like Uber Eats.’ “But when we started talking to customers, we realized we were wrong,” Waliani told TechCrunch. “We understand that there is a huge unaddressed problem in the market, where property owners are getting rents that are beyond their means. Their property can be kept empty for three or six months and in some cases they are evicted. So, ‘What if we had to secure a tenant before we got them?’ We thought.
Avanta Ventures led the round with participation from Metaprop, M13 and Madrona. Avanta is a CSAA insurance group, also known as a AAA insurer (AAA also known as Triple A, or American Automobile Association). Eric Wu and Tom Wheeler (former Opendoor CEO/CPO respectively) are also supporters. Doorstead has raised $37 million since its inception.
Currently, the San Francisco-based startup has about 150 full-time distribution employees, including about 80 in the United States. In addition to geographic expansion, Doorstead wants to focus on capital efficiency and “improving unit economics” with an eye on profitability.
“We are shooting for growth, but profitable growth,” Waliani said.
Steve Bernards, a partner at Avanta Ventures, told TechCrunch in an email that he wanted to return to Burstead in part because he believes “the rental property management space is a large and growing market for legacy providers.”
“Despite the huge market opportunity, the rental property management space suffers from poor solutions that misalign incentives, mitigate financial risks and are ineffective for all parties involved,” he continued. “…Using data-driven analytics trained on constantly updated local real estate data, Berstead Guarantee assures property owners of a guaranteed minimum rental income stream on the first day, regardless of volatile market conditions. Doorstead then helps the property owner prepare the property for listing, secure tenants and manage ongoing repairs and maintenance, all within the streamlined user interface that today’s property owners expect.
Along with the increase, Doorstead announced the acquisition of Boston Properties, another venture-backed investment property-focused startup, Knox Financial, which cut jobs late last year.
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