A San Francisco property rental startup has closed a $US2.8 million ($AU3.6 million) capital raising round with an eye on international expansion, including Australia.
Rentberry, which is a platform that automates the application process for both tenants and landlords involved in long-term rentals, raised the new money from a variety of investors, including two from Australia – 808 Ventures and Venturian boss Andrew Barlow.
Rentberry co-founder and chief executive Alex Lubinsky told Business Insider a number of favourable factors triggered the interest in the Australian market.
“The biggest one is that it is English speaking market, like New Zealand, Canada and UK. Also, there are not a lot of real estate tech companies present there — therefore low barriers to entry. Lastly, there are lots of tenants and market is big.”
The platform allows users to see how much rent applicants have offered to the landlord. This system has attracted controversy in the US for its potential to drive up rents in high demand places like San Francisco, because it could fuel bidding wars.
Lubinsky has in the past countered that criticism with the benefits that transparency brings for both sides.
Tenants Union of NSW senior policy officer Ned Cutcher told Fairfax Media earlier this year that while transparency is an improvement on the current situation, where bidding was shrouded in secrecy, “rental auctions” should be made illegal in the first place.
“Bidding wars are really only designed for one thing – and that is to push prices up.”
While Rentberry hasn’t yet decided whether it would enter Australia directly or through a licensing or franchising agreement, Lubinsky was already aware of the local intricacies in rental procedure compared to the US.
“In Australia… when you get an agent they will only show the property that you are interested in. They will not show or pitch you other properties like a case in the US,” he said.
“The other difference is the way security deposits work. In the US it is usually 1.5x rent and the money just given to the landlord. In the Australia you will have to pay a bond — usually 4 weeks rent. The bond is lodged with a state government body (Rental Tenancies Authority) and kept in an independent holding account.”
The platform currently operates in 3,600 cities in the US, and has raised $US4 million ($AU5.1 million) in total since its establishment in 2015.
Although the immediate expansion focus is on Australia, New Zealand, Canada and the UK, Rentberry also attracted money from Chinese VC fund JadeValue.
“Overall, investors from 11 countries want to see Rentberry expand and propel its business, not just in the US but also internationally,” said Rentberry co-founder and chief product officer Lily Ostapchuk.
Lubinsky formerly founded social discovery app CityHour, which he sold to private investors for an undisclosed amount in January 2015. Ostapchuk also worked at CityHour as its chief product officer.