Sunroom Rentals Secures $11 Million in Series A Funding

Sunroom Rentals, a real estate technology company focused on streamlining the leasing process for property managers and apartment owners, has successfully closed an $11 million Series A funding round. The investment was spearheaded by Gigafund.

Founders' Previous Success and Company Mission

Established in May 2018 by Ben Doherty and Zachary Maurais, the individuals previously behind the delivery application Favor, Sunroom was created with a specific objective. The company aims to enhance the profitability of mid-sized property management firms and apartment owners by offering a complete outsourcing solution for their leasing activities.

Following the sale of Favor to Texas-based H-E-B in 2018, the founders redirected their efforts towards the development of Sunroom. The Austin-headquartered company has engineered an application designed to allow renters to virtually tour properties, submit applications, and finalize leases entirely online.

Impact of COVID-19 and Target Demographics

The shift towards virtual property exploration and securing rental agreements has been accelerated by the COVID-19 pandemic. Maurais highlighted that a mobile-first approach is particularly attractive to millennials and Gen Z renters.

“Our team is driven by a desire to address fundamental consumer needs,” stated Maurais, the company’s president. “Having tackled food delivery, we’ve now turned our attention to the housing sector.”

Parallels Between Food Delivery and Housing Markets

CEO Doherty explained that the current state of the rental market in 2021 closely resembles the food delivery landscape of 2013. Despite the availability of online listings, many aspects of the rental process remain offline.

“In 2013, platforms like Grubhub had successfully digitized restaurant menus, but the actual transaction and delivery were often handled manually,” Doherty explained to TechCrunch. “The rental market is currently in a similar position, with listings readily available online, but touring, application submission, and lease signing frequently occurring offline.”

Growth and Market Penetration

Since its inception, Sunroom Rentals has facilitated over 2,000 leases and attracted more than 100,000 renters to its platform. The company initially concentrated its efforts in the rapidly expanding Austin market.

“This figure represents approximately 10% of renters within the greater Austin metropolitan area, according to U.S. Census data,” Maurais noted. “We intentionally chose to focus on a few key markets to achieve significant penetration and benefit from network effects, a strategy that proved successful with Favor.”

Efficiency and Benefits for Property Managers

Sunroom Rentals asserts that its platform enables units to be leased five days faster than the average market time. This accelerated process allows property managers to scale their operations more efficiently and enhance their overall leasing performance, according to Doherty.

Future Expansion Plans

The newly acquired funding will be utilized to expand Sunroom’s reach across Texas, specifically targeting Houston, San Antonio, and Dallas. Investment will also be directed towards enhancing the partner portal, providing property owners and managers with real-time data on leasing activity.

Team Growth

Currently employing 18 individuals, Sunroom Rentals intends to more than double its workforce this year, with a particular focus on recruiting talent for its engineering, product, and sales teams.

Investors and Funding Details

Gigafund led the Series A financing round, with participation from NextGen Venture Partners, Calpoly Ventures, and a diverse group of angel investors, including Gokul Rajaram (Google & Square) and Tim Heyl of Homeward. Existing investors include Founders Fund Seed, Draper Associates, Boost VC, and Capital Factory. This round represents Sunroom’s first instance of issuing stock.

Industry Perspective

Jon Basset, managing partner at NextGen Venture Partners, believes Sunroom capitalized on a timely opportunity and anticipated the trend towards “touchless leasing” even before the onset of COVID-19.

“I observed their success in building a profitable consumer marketplace with Favor and was impressed by their operational capabilities,” he stated. “The similarities between these businesses are striking, and I am confident in their ability to overcome future challenges.”

Competitive Landscape

Recent reports from TechCrunch highlight the growing competition in this space. Seattle-based Knock, a company developing tools to empower property management companies, recently secured $20 million in growth funding led by Fifth Wall Ventures.

Sunroom vs. Knock

Knock aims to modernize front office operations with CRM tools, enabling features like virtual tours and multi-channel communication with renters. Maurais clarified the distinction between the two companies.

“Knock provides a CRM solution designed for leasing agents, operating on a SaaS model,” he explained. “Sunroom, conversely, functions as a marketplace connecting renters with partnered properties for touring and application processes.”

“Furthermore, Sunroom offers a comprehensive suite of leasing and analytics software to its partners, generating revenue through both transactional fees and subscription services,” he added.