Did you know that nearly a quarter of Manhattan rental applications are rejected? Having the 7th highest rejection rate in the country, you need to make sure that you can prove that you’ll be a reliable tenant. TheGuarantors is an innovative insurtech service providing renters that may not normally qualify with stringent guidelines with a rental lease guarantee that offers peace of mind for landlords. Already widely being used in NYC and an eye towards growth in other markets and products, TheGuarantors is poised to disrupt the real estate industry.
AlleyWatch chatted with founder and CEO Julien Bonneville about their recent funding and how they are expanding their offering.
Who were your investors and how much did you raise?
We raised $11.7M in Series A funding from more than 20 individual, VC, and real estate investors. White Star Capital and Alven Capital led the round, which also included SilverTech Ventures (the venture arm of Silverstein Properties), Global Founders Capital, Rocket Internet Capital Partners, Partech Ventures, and several other prominent investors.
Tell us about your product or service.
We are an insurtech startup that develops innovative insurance products for the real estate industry.
Through our first product we act as a lease cosigner to residential tenants who have difficulty qualifying for an apartment on their own. We distribute this Lease Guarantee through our online Leasing Portal, a technology platform that streamlines the application, underwriting, and policy issuance processes. Today, we’re accepted by most of the predominant landlords in New York City and New Jersey, and we’re launching in ten new markets over the next year.
Also, through working closely with New York’s largest landlords, we’ve discovered many additional components of property leasing and insurance that are ripe for innovation. In response, we’re developing new technology enabled insurance solutions geared toward landlords and renters in both residential and commercial real estate. Stay tuned for more.
As a French national, I first moved to New York to attend business school at Columbia. As a student, I struggled to qualify for an apartment and soon learned that many New Yorkers, not just internationals and students, experience similar issues while apartment hunting. I founded TheGuarantors to solve these issues, starting with the lease qualification process. Since entering the space I’ve become even more excited by all of the opportunities that technology presents to the real estate and insurance industries.
How is it different?
What helps set us apart is our technology platform. It enables highly efficient distribution by connecting landlords, property managers, brokers/agents, and tenants via customized portals and innovative workflow automation. We’ve also developed a proprietary applicant scoring algorithm, which allows us to more comprehensively assess risks. We’re real estate experts with technology at our core, which gives us a different perspective than other insurance and property management companies.
What market you are targeting and how big is it?
We’re targeting several segments of the U.S. property and casualty insurance and surety markets, which in aggregate total over $100 billion. Our business lines currently under development have an addressable market of $20 billion.
What’s your business model?
For our Lease Guarantee, the tenant pays a fee of 5-10% of the total rent for the term of the lease. The guarantee is backed by The Hanover Insurance Group, a Worcester-MA insurance company with $14 billion dollars in assets.
How has your business changed since we last spoke to you around this time last year?
We’ve increased the value proposition of our Leasing Portal by adding new features in several areas, such as landlord/tenant collaboration and underwriting. We’ve also added key integrations that enable us to gauge real time changes in applicant risk and better manage renewals.
Over the last six months, revenues have tripled and the team has grown from 5 to 27 employees, with the majority dedicated to technology. We’re proud to now be accepted in roughly 600 buildings and 100,000 units, and we’re onboarding new properties every week.
What was the funding process like?
We’ve developed strong relationships with our seed investors, the vast majority of whom participated in the Series A. Such support made this fundraising round much smoother and quicker than the seed round. Additionally, we’re thrilled to partner with several new investors, such as Rocket Internet and Global Founders Capital.
That said, we’re now back to work and excited to shift 100% of our focus to product development and business operations.
What are the biggest challenges that you faced while raising capital?
This was my first time raising a Series A, which has been an incredible learning experience. We were fortunate to be oversubscribed in the round, so the most difficult part was determining which new partners would be most complementary to our existing group of seed investors. I’m very grateful for all of the guidance and support I received from my advisors as well as my network of fellow entrepreneurs in New York City.
What factors about your business led your investors to write the check?
Our investors like the core characteristics of our business and market traction we’ve received to date. We were able to achieve break-even six months after launch and have proven attractive unit economics going forward.
Additionally, we’ve developed a strong team of experts that understand the complexities of the insurance and real estate industries, which involve state-by-state regulations, an understanding of credit and bankruptcy laws, and several other intricacies unique to our business.
What are the milestones you plan to achieve in the next six months?
We’ll launch in four new cities over the next six months, starting with Boston and the Washington D.C. metro area. We’ll also introduce another insurance product over our Leasing Portal, with a third product scheduled to hit the market shortly thereafter. At the same time, we’ll increase NYC penetration, where we see a lot more potential.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Scrappiness and networking can be substitutes for funding, at least in the short run. When you’re lean you instill these traits into your culture out of necessity, but they’re just as important after you’ve closed financing.
Where do you see the company going now over the near term?
We’ll remain very execution-oriented. New York City is our pilot market because of its size and appetite for innovation, so we’ll continue to develop and refine products here. At the same time, we’ll take a disciplined, systematic approach to expansion outside of New York where we’ll begin to discover which practices to replicate vs. which to adapt. We’re excited to be at the intersection of real estate, technology, and insurance, and will stick to our core of delivering value to the participants within that ecosystem.
What’s your favorite restaurant in the city?
My wife Virginie and I love Insa Korean BBQ in Gowanus.