Rhino, a startup offering an alternative to security deposits, has raised $95 million after a surge in demand sparked by the need for more affordable housing.
The round, led by Tiger Global Management, values the New York startup at nearly $500 million, the company said Tuesday. Kairos and Lakestar also participated in the round, which is likely to be the final one before Rhino goes public, according to co-founder Ankur Jain.
“There are 43 million rental households in the U.S. We have a lot of opportunities to keep going here,” said Jain, a former vice president at Tinder and founder of Kairos, a venture fund and studio that builds businesses to tackle housing and health care affordability.
Rhino, which was incubated by Kairos, launched in New York in 2017 and was started by Jain and CEO Paraag Sarva. From the outset, its goal was to free up $45 billion in security deposits and put cash back into renters’ pockets. The company charges renters a small monthly fee, which covers an insurance policy for the landlord. (The fee is on a sliding scale; for a $1,000 apartment, a renter would pay $5 per month.)
By partnering with major landlords, including Brookfield and Starwood, Rhino said it covers 1 million units in 46 states. It claims to have saved renters $250 million. “We’ve now crossed a growth trajectory where we don’t need to raise more capital,” Jain said.
The company previously raised $37.7 million, according to Crunchbase. According to Jain, the new funding will allow Rhino to expand across the U.S. and to launch adjacent insurance and lending products.
The once-staid insurance business has seen a flurry of investment and IPO activity over the past year.
Lemonade, a digital insurance firm backed by SoftBank, went public in a blockbuster IPO in July. In November, home insurance startup Hippo raised $350 million, fueling speculation that it, too, could go public this year.
Rhino is one of several startups offering new ways to protect landlords from tenants who damage rentals or quit their leases early. Others include TheGuarantors, Obligo and Jetty.
Over the past year, they have gotten a boost as more cities and states require alternatives to security deposits to make moving cheaper for tenants. (Rhino enlisted a team of mayors and multifamily players to make the case that its products could be part of governments’ coronavirus response.)
Rhino said it has experienced “explosive” growth over the past two years as landlords look to entice tenants with lower move-in costs and lawmakers seek to make housing more affordable.
“Housing affordability was a challenge well before the pandemic, but [Covid] put it at the forefront for both landlords and policy makers,” Jain said. “It’s quickly becoming a standard across the country.”
Rhino’s contracted annual recurring revenue hit $60 million this month, up from $4 million in January 2019. The company said it is on track to hit $100 million in contracted revenue by the third quarter of this year.
Jain said Rhino is not profitable companywide, but is profitable on a per-unit basis.