City living is expensive and housing is at the top of the expense list. One of the ways to soften the blow is to find roommates to minimize costs. However, finding the ideal roommate is not always easy, especially in a city like New York. First you may think to turn to your friends and colleagues who you trust. The timing usually does not work out with them and then you turn to Craig’s List with your fingers crossed, hoping you end up with someone who is sane but essentially a stranger. Roomi is a more viable alternative. It’s a dedicated marketplace for shared housing where users can list their empty spaces and have potential roommates apply in a safe and secure setting. The platform offers safety features like verified listings, background checks, and in-app messaging to ensure that your next roommate situation does not turn into a nightmare.
Today, we chat with CEO and Founder Ajay Yadav (Forbes 30U30 ’17) about the genesis of the idea, its growth, future plans, and most recent round of funding.
Who were your investors and how much did you raise?
I’m really excited to share Roomi has raised Series A funding! Atami Capital lead this round and we were able to raise $11 million bringing our total funding to $17 million. Atami Capital was a great investment company to partner with. They are located in the U.K. and invest in companies like Simba and Quipup.
DCM and Great Oaks Venture Capital continued their support in Roomi this round and we are pleased to also be working with a few new investors like Rosecliff Ventures, Townsquare Media and JXC Ventures. We’re also really excited to be working with some amazing strategic investors, like Paul Levine, Former President and COO at Trulia/Zillow Group and Scott and Cyan Banister, AngelList Syndicate and Board Member at PayPal.
Tell us about Roomi.
Roomi is a peer-to-peer shared housing marketplace making it safer and easier to rent rooms and find roommates. Our users are able to easily list their empty rooms then potential roommates can apply to move in. We verify every listing and offer additional security features, like background checks.
What inspired you to start Roomi?
I’ve always believed anyone should be able to move anywhere in the world and feel at home. I grew up in New Delhi, India and moved to the US in 2006 to study computer science at NYIT. It was really scary to move here alone and try to feel like I belonged, so I knew someday I wanted to find a way to help people feel safe and comfortable wherever they were living.
After a few years of living in NYC and experiencing how difficult it was to search for flexible housing and find compatible roommates, I knew there had to be a better way to find a room to rent. Facebook wasn’t built to search for apartments or room rentals and listings on Craigslist weren’t verified. This inspired me to find a better solution. While Roomi was in beta, we were really bootstrapped – Roomi was actually hosted on a Tumblr blog and Google forms before we built our first product!
How is it different?
Roomi is the safest platform to search for short and long-term room rentals. We are one of the only platforms that does not aggregate listings, every room posted on our platform is user-generated. Also, other platforms either don’t verify listings at all or provide very limited safety features.
Our users are required to complete a detailed profile and can connect their social media accounts so potential roommates will easily know if they are compatible. Then, we have several security methods in place to ensure every person and place on Roomi is real. We verify every listing, offer background checks and in-app messaging. These safety features help build trust among our users and allow them to easily decide where to live so they can move quicker.
What market are you targeting and how big is it?
The future of renting is shared living. Millennials aren’t buying homes. Gen Z-ers probably won’t be buying homes. Living with roommates isn’t just a trend – flexible living and shared housing is becoming the norm. The shared housing and room rental market is huge, the percent of adults living with roommates is steadily increasing. There are 32 million people living with roommates right now and about 90 million moves every year.
What’s your business model?
We are making it safer and easier to search for flexible shared housing options. We’re constantly finding new ways to facilitate safer move-ins and simplify the searching process through partnerships, safety verification features and rental application systems. Right now, we are testing an online booking system similar to Airbnb to allow our users to apply for a room quickly and have already seen an initial positive response.
How have you been able to scale in a space that has traditionally been very crowded?
The shared housing and room rental market has largely been ignored by the big players, like Airbnb and Craigslist, leaving Roomi well-positioned to dominate the room rental market. We are already even with Craigslist for supply of rooms in NYC and the market itself is growing rapidly.
Over the last two years we’ve been able to grow in a lot of different ways. When we first launched in 2015, we raised $2 million in seed funding and did a massive NYC grassroots campaign which generated 55,000 sign ups. Within our first year we had over 100,000 app downloads. Over 60% of our traffic is still organic because Roomi is one of the only platforms solving the problems in the current room rental market. Today, we have around 1 million registered users and nearly 250,000 apartments listed on our platform.
What was the funding process like?
Long! It takes a lot of time to grow and close a round and it can be hard to be away from the day to day. Fundraising is all about finding the right investors. For this round we knew we wanted to find investors who really understand how young people are evolving the shared housing market. We’re looking forward to using this funding to help us scale and continue to grow.
What are the biggest challenges that you faced while raising capital?
The biggest challenge of raising capital for Roomi has always been knowing when to raise it. We’ve always grown faster than we projected so it’s challenging to know when we need to raise again.
What factors about Roomi led your investors to write the check?
Our investors funded Roomi because they can see shared housing is a growing global trend and that Roomi is leading this market space. The right investors for Roomi are the ones who know living with roommates is the lifestyle choice for millennials and Generation Z.
What are the milestones you plan to achieve in the next six months?
The next 6 months we want to expand our online booking system to all of our users. This will help improve their search for a room to rent and help them move even quicker.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
The most important advice I can give to a startup without a new round of funding is to build something that works. I believe startups should focus on solving a problem. If you aren’t solving a problem and building something that’s truly helping people, it’s not the right time to spend money. Fundraising is all about hitting goals and before a company thinks about raising a new round, they should make sure they are solving problems for their users and hitting their goals.
Also, I think it’s important for companies to know there is more than one way to fundraise. We have never raised money from only one source. We believe finding the right investors is the most important thing and each partner can help Roomi in a different way. If a company doesn’t have a fresh round of capital, they can find different ways to raise it. For example, we work with investment companies but we are also letting our users become investors through our Republic campaign because they understand our mission and can support Roomi in a different way.
Where do you see the company going over the near term?
Our goal is always to make the shared housing market as safe as possible. In the near future, we plan to make Roomi’s platform even safer. For example, the last few months we’ve been testing a background check feature. We wanted to see if this is something our users were interested in and within a few months thousands of people used the feature.
In fact, over ⅓ of the people listing their empty rooms on Roomi require potential roommates to get a background check. We’ve already started working on ways to expand this feature and make it even better. Making the moving process safer is making it easier. If we can make the moving process as safe and frictionless as possible, people will be able to move into a new place right away.
Where is your favorite fall destination in the city?
My favorite place in the fall in NYC is Prospect Park. I just got a new puppy and I’m really looking forward to bringing Caleb to the park this fall.