OpenRent, one of a number of online letting agents (or realtor, as it might be described in the U.S.), has picked up £4.4 million in backing from Rocket Internet’s venture arm Global Founders Capital.
The London-based company’s last funding round was a “multi-million pound” ‘equity for media’ deal with Northern & Shell Ventures, part of the independently-owned UK media group which operates Express Newspapers, The Health Lottery and OK! magazine (and, until very recently, TV station Channel 5).
“Our last deal was all about increasing visibility, and letting landlords and tenants know there is an alternative to the high street. [The idea of an] online agency was new back then,” OpenRent co-founder Daz Bradbury tells me. “It’s now an established product, and a go-to solution for a large portion of the market”.
Founded in 2012, OpenRent provides services to landlords and tenants, including property advertising and “tenancy creation and management tools,” as an arguably better-value and certainly cheaper alternative to many of the products a high street letting agent offers.
Pricing starts at £29 for its “tenant find” feature, though OpenRent also offers other paid-for features, such as contracts, reference checking, and gas and electrical safety; the kinds of things landlords would normally pay an agency for. It doesn’t, however, handle viewings, for example.
With that said, OpenRent’s margins are low compared to traditional brick ‘n’ mortar letting agencies, putting the startup and its direct competitors, such as uPad, in the pile ’em high, sell ’em cheap game. That’s not something Bradbury necessarily disputes, arguing that its product and tech is enabling it to scale with a very small, albeit growing team of just ten people.
“[Because of] our product focus, the levels of service we can offer customers improve by the day. For example our time to let a property (pretty much the key success measure for a landlord) continues to fall and is currently 8 days versus 3 weeks for a high street agent,” he says.
With 50,000 properties for rental advertised last year, OpenRent also claims to be the biggest lettings agent in the U.K., though comparing it to a traditional high street agency, such as Foxtons, doesn’t account for the difference in business model, basket size and margin. Number of listings is one metric, size in terms of revenue is something altogether different.
Traditional agencies (or the likes of Rentify since it pivoted to a ‘guaranteed rent for landlords’ model) offer to fully manage a property, too, therefore going beyond landlord and tenant matching and related add-on services, which is, arguably, the lower end of the market that OpenRent and its ilk have successfully targeted and, increasingly, disrupted.
Meanwhile, OpenRent says the new capital will be used to grow its team, specifically developers who can accelerate product development and help the startup build new features enabled by the scale it says it has now reached.
“We’ve evolved from a product which targeted the most painful elements of being a landlord (i.e, finding tenants and creating a tenancy with them) to become the go-to service for our customers,” adds Bradbury. “This means helping them with a broader range of landlord activities, which we continue to build out”.