Ukio Raises $9M for Long-Term Remote Work Rentals | UKIO

The Evolving Landscape of Long-Term Rentals

For the past ten years, numerous startups have attempted to create variations of the Airbnb model. However, Ukio believes it has identified a unique approach to navigate the increasingly complex world of housing rentals and regulatory challenges, particularly as remote work gains prominence.

Ukio’s Distinctive Offering

Ukio specializes in rentals lasting one month or longer, providing a comprehensive, high-quality experience in desirable urban locations through partnerships with local property owners. Initial outcomes demonstrate considerable promise.

Rapid Growth and Expansion

Founded in Barcelona, Spain, early last year, the company has expanded to encompass over 100 apartments across Barcelona and Madrid. Notably, they have maintained a 95% occupancy rate.

Today, Ukio announced a substantial seed funding round of $9 million, backed by leading European investors. These funds will be used to expand their presence to over 700 apartments in six major European cities by 2022.

Lisbon is slated to be the next location, followed by expansions into London and Berlin.

Understanding Ukio’s Customer Base

Two Primary User Groups

According to co-founder and CEO Stanley Fourteau, Ukio’s clientele currently divides almost equally between two distinct groups.

Approximately half are new, long-term residents who have secured local employment and intend to transition into permanent housing. This segment typically stays for six months or longer.

The remaining portion consists of a growing number of digital nomads seeking accommodations beyond the scope of traditional short-term rentals. These individuals generally stay for around two to three months.

The Rise of Remote Work

Fourteau, a former director at Airbnb, highlights the increasing prevalence of remote and distributed work as a key driver of demand. He cites a Gartner report projecting that remote workers could constitute 31% of the total workforce by year-end.

However, some proptech investors suggest this figure may be conservative, anticipating a future where office space is viewed as a luxury and individuals prioritize living in locations offering vibrant “third spaces” for entertainment and community – a characteristic of many European cities.

Differentiating Ukio in a Competitive Market

A Crowded Field

Ukio, meaning “living in the moment” in Japanese, is not alone in targeting this evolving demographic. Other prominent companies in this space include Blueground, Sonder, Sentinel, Zeus, and Airbnb’s own long-term rental options.

However, Ukio distinguishes itself through a vertically integrated approach.

Vertically Integrated Management

“Ukio handles the rental, furnishing, and management of properties, overseeing the entire guest experience,” Fourteau explains. “This allows us to professionalize the supply side for platforms like Airbnb, similar to how global hotel chains professionalize supply for Booking.com.”

This model arose from his experience at Airbnb, where the demand for extended stays didn’t align with the platform’s core focus.

He notes that building a vertically integrated operation like Ukio within Airbnb could potentially conflict with its existing host community and compromise relationships.

Securing Prime Locations

Currently, the most desirable long-term rentals are often secured before they are even listed on Airbnb. Ukio-operated apartments, conversely, are designed for long-term presence within the community.

Ukio’s approach to property owner relationships further strengthens its position. They enter into 7-10 year lease agreements with full tenant management, optimizing returns for owners by minimizing vacancy rates and reducing management burdens.

Ukio offers guaranteed yields and a hassle-free experience, resulting in more inbound requests from landlords than proactive outreach, creating a robust pipeline for future growth.

Key Differentiators: A Detailed Look

• Apartment Selection: Ukio employs a 200-point assessment to identify and secure the best apartments in prime locations.
• Unit Mix: They often focus on individual units, allowing for broader distribution across a city compared to companies that acquire entire buildings.
• Unique Design: Each unit receives a customized design, contrasting with the templated approaches of some competitors.
• Internal Management: Ukio maintains an in-house team to manage all properties, unlike many competitors who rely on hosts.
• Geographic Focus: Ukio is initially concentrating on the European market, while many competitors are focused on the U.S.

Leveraging Technology

In addition to a supply acquisition tool, Ukio utilizes dynamic pricing to maximize occupancy and an internal design system to streamline installation and onboarding processes. Stanley’s brother, Jeremy, a co-founder, brings a decade of experience from companies like Zynga, EA, Headspace, and Knotel.

Navigating Challenges and Future Outlook

As a business centered on physical properties, Ukio faces potential risks from evolving local regulations and COVID-related restrictions. Fourteau acknowledges these challenges but believes Ukio’s model is well-positioned due to its strong appeal to long-term residents.

The primary challenge lies in competing with other well-funded companies who will likely adapt their strategies to attract the growing number of remote workers.

Fueling Expansion with Seed Funding

This need for rapid scaling is the driving force behind the $9 million seed funding round, led by French venture firm Breega, with participation from Heartcore and Partech, as well as angel investors Iñaki Berenguer and Avi Meir.

*Disclosure: The author has a prior connection with Stanley Fourteau, having attended college with him nearly 20 years ago, though they had not been in contact for a decade prior to receiving this news.