NestEgg, a startup aimed at making sure landlords get paid on time, just raised $7 million to hit the gas on new offerings, including financing for maintenance expenses.
The Series A was led by Hyde Park Venture Partners, with participation from Bonfire Ventures, BAM Ventures, Financial Venture Studios, Dreamit Ventures and Hyde Park Angels, the company said.
Based in Chicago, NestEgg bills itself as a solution for mom-and-pop property owners who can use its app to coordinate administrative tasks, maintenance jobs and rent collection. But its signature product is a rent assurance program that guarantees landlords are paid on the first of every month — a pain point that has intensified since the onset of the pandemic.
The company was started in 2017 by Expedia alums Eachan Fletcher, Amie O’Donohue and Jeff Slipko. Fletcher said the idea from NestEgg came to him after he became a landlord himself and realized the headache involved.
“The way renting and leasing has worked is so old fashioned. It’s about saying, ‘We signed this contract and you pay once a month,’” he said. “With all the flexibility you have with technology, why is that how it works?”
For tenants living paycheck to paycheck, paying a lump sum is often impossible. Meanwhile, landlords have their own expenses due, leaving them with a cash-flow crisis at the start of the month unless the rent is in hand.
The national ban on evictions has added another wrinkle to the dynamic, leaving landlords whose tenants can’t pay with little recourse.
Fletcher said NestEgg “decouples” that financial standoff by paying landlords itself. In exchange, tenants pay NestEgg on flexible terms. “If you are a tenant who gets paid weekly, you can pay rent weekly to NestEgg,” he said.
NestEgg pays landlords by drawing on its own line of credit. Landlords also pay a monthly fee: The basic “Rent Advance” program, which allows landlords to collect the full rent on the first of the month, costs $5 per unit per month. A pricier “Rent Assure” program lets landlords purchase insurance against tenant default for $49 per unit per month. In exchange, NestEgg covers up to four months of lost rent.
In conjunction with the Series A, NestEgg will also launch a financing feature for landlords called NestEgg Pay. For landlords who use the app to process maintenance requests, the company will pay upfront with interest-free financing for up to six months. Landlords pay back NestEgg in installments.
Ira Weiss, a partner at Hyde Park Venture Partners, cited the “massive” market of mom-and-pop landlord, who own one to three units, among the reasons Hyde Park invested in NestEgg. According to Weiss, NestEgg currently has 3,000 landlords using its platform, but he anticipates that the funding could boost that number to tens of thousands.
Over the past few months, investors have poured funds into startups aimed at targeting small landlords. In July, MeetElise, an AI-powered leasing startup, raised $6.75 million. Realync, a video tour company targeting multi-family owners, announced a $22 million round on Wednesday.
Fletcher said the funding will allow NestEgg to double its 18-person team within the next three months. NestEgg declined to disclose financials, but said its business has been growing 30 percent each month since September 2019.