Rejected by 180 incubators, Spotahome clinches Spain’s first Silicon Valley-led funding round
Spain · Oct 04, 2018· By Amalia González
Now in Europe’s US$500 billion home rental market, the Spanish proptech will soon expand to LatAm, the US and Asia
One of the world’s most innovative portals for residential lettings, Spotahome was once almost left on the shelf and forgotten due to a lack of funding.
Today, the Spanish proptech firm serves over 3 million people a month. In just four years, the portfolio has accumulated over 130,000 rental homes in 450 cities and 65 countries. About 85% of its visitors are clicking on real estate outside of Spain. The total business value generated was estimated to reach US$71 million in 2017. Spotahome earns average commissions of 9% on the contract rentals.
This is a far cry from the early days when the original co-founders, CEO Alejandro Artacho and CTO Bryan McEire, pitched for funding at tech events. “All the 180 incubators ended up by telling us no,” recalled Artacho. The bootstrapped startup eventually managed to raise almost €1 million from angel investors in 2015. Struggling with cashflow problems due to rapid expansion, Spotahome finally became profitable in 2017. Six months later, Silicon Valley VC Kleiner Perkins, which has also invested in AirBnB, led a Series B round to raise €34 million for Spotahome – a historic breakthrough for the Spanish startup ecosystem.
Differentiation in innovation
Unlike AirBnb, Spotahome only lists properties with minimum rental of one month. Landlords do not upload their own information. Instead, independent home checkers are sent to visit the properties to take videos and photographs at the premises. The audiovisual materials are then uploaded for virtual viewings by prospective tenants.
As Spain’s pioneer for digital real estate video library, Spotahome offers a hassle-free digital property viewing service for people who are unable to physically visit and see the properties for themselves. Landlords can also reach a wider range of potential tenants, especially those who are planning to relocate overseas. Local staff can also help clients who do not speak the same language as the overseas landlords or agents.
Another selling point is that the online viewings can only be accessed within specific dates. Unlike AirBnb, the viewing time restrictions ensure that the property information will always be up-to-dated by the home checkers on request by clients. Spotahome will only transfer the rental deposits and the first month’s rent to the landlords after 48 hours from the moving in date.
Excessively high rents are also avoided by the publishing of average rents and market data for each local district. A landlord or property listing with several negative results from home checkers or tenants will also be removed from the website. Hence, cancellations are reduced although the costs incurred are higher because of the home checking fees.
Spotahome will employ additional staff to bring even more offline rental properties onto its platform. Future income will also be earned by providing property management services such as cleaning, repairs and removals.
In 2014, Spotahome got its first tenant – a Japanese student in Madrid who rented a flat for 18 months. It took five days to close the deal and a co-founder had to physically meet up with the tenant to collect the rent money.
Today, all that can be done online within minutes. Spotahome currently has over 250 fulltime staff and 120 freelance home checkers. In March, its number of rental listings jumped to 130,000 in 450 cities when Spotahome acquired Erasmusu. The largest student e-community in Europe will act as a perfect springboard into the lucrative student residential market.
With stakes in tech giants like Google, Uber and AirBnb, Kleiner Perkins is well-known for scaling up tech companies globally. Its European portfolio includes Spotify, GoEuro and most recently Spotahome as its fifth investment in the continent. The Silicon Valley VC backing will spearhead the proptech’s expansion into LatAm, USA and Asia as fast as possible. Just as Airbnb revolutionized the holiday rental market in 2008, the rental housing sector is now ripe for the next disruption.
Artacho says Spotahome will be even better than AirBnb. He wants to build the rental platform into the Amazon of residential lettings with the world’s biggest video library and database for rental homes.
Edited by Suzanne Soh