There are many reasons to rent out your apt to websites like VRBO and AirBnB, and at the same time there are many reasons not to. To name a few: safety, dealing with the tenants, and the time involved in getting your living space ready. Well, there is a company that is taking away all of these stressors for you so that you can travel with ease while there are complete strangers sleeping in your bed. MetroButler, the company that is taking away the stress of renting out your apartment has raised a round of funding hoping to push them up as a serious competitors.
CEO Matthew Lerner talks about his unique experience raising capital and how he plans to make a dent on the property-rental market.
Who were your investors and how much did you raise?
Our investors are made up of a pool of high net-worth individuals. We chose investors who brought knowledge from real estate, hospitality, financial services, and the start-up space. We did not take any institutional money for this round of funding. Our seed round was structured as a SAFE (an investment instrument made popular by Y Combinator) and was for $460,000.
Tell us about your product or service.
MetroButler is a full-service property manager and concierge for people looking to rent out their home while they travel. Property rental sites like AirBnB, VRBO and HomeAway have never been more popular, but the experience of being a host and renting out a home requires a serious time commitment and can often be stressful. MetroButler puts in the hard work so our clients can travel with peace of mind and make money while doing so.
What inspired you to start the company?
My cofounders and I noticed that despite the popularity, ingenuity, and simplicity of AirBnB and similar short-term rental sites, there were only about 20,000-30,000 active listings in NYC at any given time. This seemed odd to us considering that NYC has around 3M apartments and homes. We did a few months of field research and found that the most popular reasons people gave for not renting their home on AirBnB were (a) not having the time to manage the property listing, booking requests, key drops, and ongoing guest communication and (b) being afraid that something bad would happen to their home in their absence. We saw this as an opportunity to enter the short-term rental space by offering a full concierge and property management service for those who wanted to take advantage of the sharing economy but did not have the time, know-how, or security measures to do so properly.
What’s your business model?
Our business model is simple. We do not charge our host-clients any up front consultation charge, recurring monthly fees, set up fees or a-la-carte service fees. Rather, we charge a flat commission for all business we generate on their behalf. We only take our commission when we are able to successfully rent out a client’s home during their travels and make money for them. We are a rare business where the work we do and the service we provide actually makes money for our clients.
What was the funding process like and what were the biggest challenges you faced while raising capital?
The good: Believe it or not, the day-to-day aspects of raising capital was actually fun. I love getting to talk about our business and explain how we help our clients. I’m passionate about what we do and how we help our customers; so being able to share that with potential investors is both fun and fulfilling.
The challenges: We have been lucky to have interest from some extremely smart and talented investors, who will (and already have) helped us make MetroButler an even better experience for our rapidly growing customer base. But, one of the things that makes our investors so valuable to us, is there vast experience across relevant sectors. This also, in turn, makes the diligence process rather challenging. They ask pointed, prodding and thought provoking questions that are rarely easy to answer. We are always looking for ways to make MetroButler better than it was the day before, so the thought provoking questions we were asked during fundraising directly helped us get close to our goal: providing the best customer experience possible.
What factors about your business led your investors to write the check?
Probably the most significant factor that played in our favor is that we were able to do a soft launch of our business concept and prove its viability before reaching out to potential investors. By the time we were setting up meetings to raise funds we had already proven out our concept, demonstrated a business model that would be cash flow positive, and shown an ability to maintain month over month sales growth, even at a very early stage.
What are the milestones you plan to achieve in the next six months?
Our biggest milestone coming up will be the development and rollout of a great consumer facing platform, allowing our clients to log in to their own dashboard to make booking requests for their listing, seamlessly through our portal. We are also very excited to begin staffing up and building a terrific support team concentrating on customer experience and business growth.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
First, I think it’s necessary to take a step back and give a good hard look at what the company is trying to accomplish. If the company is truly filling a need or solving some problem for people, there are always people out there willing to put their money into a smart business that also has strong leaders.
Secondly, there is a common perception that “nothing ruins a good story like numbers”. Many companies would rather sell themselves as “pre-revenue” rather than acknowledging a modest or small amount of sales, believing that investors will be more intrigued by the promise of untapped potential. While this may be true for a few companies with ENORMOUS disruptive potential, by and large most investors would rather see a business that is able to point to some amount of growth and some amount of proven ability to make money before feeling comfortable enough to invest.
Where is your favorite place to enjoy the fall weather in the area?
Indoors! Spring and Summer is the time for making plans outside, going to the beach, late night dinners at an outdoor table, and rooftop parties. But this time of year, I’ll take inside a bar with a plate of hot wings, a pitcher of beer and hours of football, especially if the University of Michigan game is on.