The pressure is on to ditch rental security deposits.
California-based LeaseLock is the latest startup to raise money for a security deposit alternative, pocketing $52 million from investors, the company announced Wednesday. The Series B was led by Westerly Winds, a London-based firm started by founding partners from BlackRock, and Wildcat Venture Partners.
SoftBank Ventures Asia also participated, along with Vertex Ventures US, Liberty Mutual, American Family Ventures, Moderne Ventures, Strata Equity Group, Veteran Capital and Mucker Capital.
Founded in 2013, LeaseLock offers insurance to landlords, replacing the need for a traditional security deposit. The product is integrated into a property management system for multifamily owners and managers. Renters can choose between three plans, starting at $19 per month to cover a $2,500/month apartment.
There is an estimated $45 billion tied up in security deposits, according to industry sources, a problem that a slew of startups has tried to tackle in recent years.
“The market is shouting for a better solution to upfront housing costs,” LeaseLock’s co-founder and president Reichen Kuhl said in a statement. The funding will let the company double down on its security deposit product, and create new insurance and payment tools.
In the wake of the pandemic, the company said demand for affordable housing paired with a consumer cash crunch caused a spike in demand for its product.
In 2020, LeaseLock quadrupled the number of homes on its platform to 1.5 million. Customers include Greystar, Cushman Wakefield, Goldman Sachs, Harbor Group and others.
Founded in 2013, LeaseLock received $1 million in seed funding in 2016 from American Family Ventures, the VC arm of the $12 billion insurance giant. It closed a $10 million Series A in 2018.
It’s one of several startups pitching security deposit alternatives, along with The Guarantors, Rhino, Jetty and Obligo.
In November, Obligo raised a $15.5 million Series A from investors including 83North, 10D, Entrée Capital and Viola Credit.
Last month, Rhino raised $95 million from Tiger Global Management, Kairos and Lakestar. The round, which valued Rhino at $500 million, is likely to be the final one before the company goes public, co-founder Ankur Jain said.
Rhino charges renters a small monthly fee to cover an insurance policy for landlords. For a $1,000/month apartment, the monthly fee would be $5.