“Rent tech” focused RET closes first fund; pours $5M into management platform SmartRent

Today, Real Estate Technology Ventures (RET) Ventures announced the final close of $108 million for its first fund.  RET focuses on early-stage investments in companies that are primarily looking to disrupt the North American multifamily rental industry, with the firm boasting a roster of LPs made up of some of the largest property owners and […]

Today, Real Estate Technology Ventures (RET) Ventures announced the final close of $108 million for its first fund.  RET focuses on early-stage investments in companies that are primarily looking to disrupt the North American multifamily rental industry, with the firm boasting a roster of LPs made up of some of the largest property owners and operators in the multifamily space.

RET is one of the latest in a rising number of venture firms focused on the real-estate sector, which by many accounts, has yet to experience significant innovation or technological disruption. 

The firm was founded in 2017 by managing director, John Helm, who possesses an extensive background as an operator and investor in both real estate and real estate technology.  Helm’s real-estate journey began with a position right out of college and eventually led him to the commercial brokerage giant Marcus Millichap, where he worked as CFO before leaving to build two venture-backed real estate technology companies.  After successfully selling both companies, Helm worked as a Venture Partner at Germany-based DN Capital, where he invested in companies such as PurpleBricks and Auto1. 

Speaking with investors and past customers, John realized that there was a need for a venture fund specifically focused on the multifamily rental sector.  RET points out that while multifamily properties have traditionally fallen under the commercial real estate umbrella, operators are forced to deal with a wide set of idiosyncratic dynamics unique to the vertical.  In fact, outside of a select group, most of the companies and real estate investment trusts that invest in multifamily tend to invest strictly within the sector.

Now, RET has partnered with leading multifamily owners to help identify innovative startups that can help the LPs better run their portfolios, which account for nearly a million units across the country in aggregate.  With its deep sector expertise and its impressive LP list, RET believes it can bring tremendous value to entrepreneurs by providing access to some of the largest property owners in the US, effectively shortening a notoriously lengthy sales cycle and making it much easier to scale.

Photo: Alexander Kirch/Shutterstock

One of the first companies reaping the benefits of RET’s deep ties to the real estate industry is SmartRent, the startup providing a property analytics and automation platform for multifamily property managers and renters.  Today, SmartRent announced it had closed $5 million in series A financing, with seed investor RET providing the entire round. 

SmartRent essentially provides property managers with many of the smart home capabilities that have primarily been offered to consumers to date, making it easier for them to monitor units remotely, avoid costly damages and streamline operations, all while hopefully enhancing the resident experience through all-in-one home controls.

By combining connected devices with its web and mobile platform, SmartRent hopes to provide tools that can help identify leaks or faulty equipment, eliminate energy waste, and provide remote access control for door locks.  The functions provided by SmartRent are particularly valuable when managing vacant units, in which leaks or unnecessary energy consumption can often go unnoticed, leading to multimillion-dollar damage claims or inflated utility bills. SmartRent also attempts to enhance the leasing process for vacant units by pre-screening potential renters that apply online and allowing qualified applicants to view the unit on their own without a 3rd party sales agent.

Just like RET, SmartRent is the brainchild of accomplished real-estate industry vets. Founder and CEO, Lucas Haldeman, was still the CTO of Colony Starwood’s single-family portfolio when he first rolled out an early version of the platform in around 26,000 homes.  Haldeman quickly realized how powerful the software was for property managers and decided to leave his C-suite position at the publicly-traded REIT to found SmartRent.

According to RET, the strong industry pedigree of the founding team was one of the main drivers behind its initial investment in SmartRent and is one of the main differentiators between the company and its competitors.

With RET providing access to its leading multifamily owner LPs, SmartRent has been able to execute on a strong growth trajectory so far, with the company on pace to complete 15,000 installations by the end of the year and an additional 35,000 apartments committed for 2019.  And SmartRent seems to have a long runway ahead.  The platform can be implemented in any type of rental property, from retrofit homes to high rises, and has only penetrated a small portion of the nearly one million units owned by RET’s LPs alone.

SmartRent has now raised $10 million to date and hopes to use this latest round of funding to ramp growth by broadening its sales and marketing efforts.  Longer-term, SmartRent hopes to permeate throughout the entire multifamily industry while continuing to improve and iterate on its platform.

“We’re so early on and we’ve made great progress, but we want to make deep penetration into this industry,” said Haldeman.  “There are millions of apartment units and we want to be over 100,000 by year one, and over a million units by year three.  At the same time, we’re continuing to enhance our offering and we’re focused on growing and expanding.”

As for RET Ventures, the firm hopes the compelling value proposition of its deep LP and industry network can help RET become the go-to venture firm startups looking to disrupt the real estate rental sector.

Sick of managing your Airbnb? Vacasa raises $64M to do it for you

Airbnbing can be a ton of work. Between key pickups, tidying, and maintenance emergencies, renting out your place isn’t such a passive revenue source. But Vacasa equips owners with full-service vacation home management, including listings on top rental platforms like Airbnb and HomeAway, as well as local cleaners who come between guests. It now manages […]

Airbnbing can be a ton of work. Between key pickups, tidying, and maintenance emergencies, renting out your place isn’t such a passive revenue source. But Vacasa equips owners with full-service vacation home management, including listings on top rental platforms like Airbnb and HomeAway, as well as local cleaners who come between guests. It now manages 10,000 vacation rental properties in over 16 countries.

With the peer-to-peer housing market maturing and Airbnb looking to go public, private equity firms see an opportunity in who controls the end relationship with home owners like Vacasa does. So today the startup is announcing it’s raised $64 million in a Series B bridge round led by Riverwood, and joined by Level Equity, Assurant, and Newspring. The cash will fuel Vacasa’s expansion into real estate as it seeks to sell property to people who want to own and rent out a vacation home.

Vacasa was impressively bootstrapped from 2009 until 2015. “I’ve always been passionate about vacation rentals. When traveling with friends or family, I love having common spaces to come together in” says CEO Eric Breon. He founded the company after owning a vacation cabin on the Washington Coast. He’d go up in the Spring, spend a weekend fixing up the place, it’d sit idle all summer, and then he’d have to spend another weekend closing it up. He considered a local property manager, but they massively underestimated how much he could earn off renting it out. So Breon built Vacasa to make it easy for home owners to earn the most money without a hassle.

After years growing the business organically, Vacasa raised a $35 million series A from Level Equity in 2015, then $5 million more from Assurant. Then in fall of 2017, it raised an $103.5 million series B. Now it’s topping up that round with $64 million and a new valuation warranted by the startup’s growth this past year. That brings Vacasa to a total of $207.5 million in funding

While that’s just a fraction of the over $4.4 billion Airbnb has raised. But Vacasa caters to a more upscale market that don’t want to manage the properties themselves. With plenty of popular listings sites out there, Vacasa gets easy distribution. But eventually as the other giants in the space become public companies, they’ll be forced to chase bigger margins that could see them compete with Vacasa after years of partnership.

Breon remains confident, though. When I ask him the biggest existential threat to the business, he declares that “We’ve reached a point where failure isn’t a realistic outcome. We have great retention of our homeowners, and strong recurring revenue. The question is more about how quickly we can continue scaling into the huge $32 billion market we’re focused on.” Getting to an exit might not be quite so straightforward, but with life seeming to get more stressful by the year, there’ll be no shortage of people seeking a getaway.