Knox Financial raises $10M to take the pain out of being a landlord

Published April 19, 2021

We’ve all heard the phrase “passive income” to describe how people can make money by owning rental properties. Many Americans would love to passively earn money, but the process of becoming a landlord can be intimidating and complicated.

I mean, how many people have looked back and wished they hadn’t sold a property after seeing its value rise years after selling it?

And those who are already landlords can get overwhelmed by the complexities of managing properties.

One startup out of Boston, Knox Financial, aims to help people identify and manage residential rentals with its algorithm-based platform, and it’s raised a $10 million Series A to help it further that goal. Boston-based G20 Ventures led the round, which included participation from Greycroft, Pillar VC, 2LVC, and Gaingels.

The investment brings Knox’s total raised since its inception in 2018 to $14.7 million. The company closed on a $3 million seed round in January 2020, led by Greycroft.

Knox co-founder and CEO David Friedman is no stranger to startups. He founded Boston Logic — an integrated marketing platform and online marketing services for real estate offices and agents — in 2004. He sold that company (now under the name Propertybase) to Providence Equity for an undisclosed amount in 2016.

Knox launched its platform in March of 2019, with the goal of offering homeowners who are ready to move “a completely hands-off way” of converting a home they’re moving out of into an investment property. It also claims to help landlords more easily and efficiently manage their rentals.

At the time of its seed round early last year, the company was only operating in the Boston market and had 50 units on its platform. It’s now operating in seven states, has “hundreds” of investment properties on its platform and is overseeing a portfolio of more than $100 million.

So how does it work? Once a property is enrolled on Knox’s “Frictionless Ownership Platform,” the company automates and oversees the property’s finances and taxes, insurance, leasing and legal, tenant and property care, banking and bill pay.

Knox also has developed a rental pricing and projection model for calculating the investment rate of return a property will produce over time.

Image Credits: Knox Financial

“We save investors a lot and almost always make their portfolios more profitable,” Friedman said. “If someone is moving or upsizing, we can turn properties into incredible ROI generators or cash flow.”

The company’s revenue model is simple.

“When a dollar of rent moves through our system, we keep a dime,” Friedman told TechCrunch. “We align our interests with our customers. If there’s no rent coming in, we’re not making money. Or if a tenant doesn’t pay rent, we don’t make money.”

Knox plans to use its new capital to continue expanding geographically and getting the word out to more people.

“We want to become the de facto platform for real estate investment acquisition and ownership,” Friedman said. “And we have to be coast to coast to really do that for everybody. So, we’re still very early in our growth trajectory.”

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Bob Hower, co-founder and partner of G20 Ventures, shared that weeks after his college graduation, he had bought a fixer upper with his mother’s help. A week after finishing renovations, he put the house on the market. Over the subsequent five months, he gradually reduced the price as the market softened, and eventually the property sold at a small profit.

“That house now is worth a multiple of what I paid for it,” Hower recalls. “In hindsight, the mistake I made was deciding to sell the house at all.”

That experience helped Hower appreciate what he describes as a “clarity of thinking” in Knox’s business model.

“Had Knox existed decades ago, I’d likely still have that fixer-upper I bought after college,” he said. “Investing platforms such as Betterment have collapsed multiple advising and optimization activities into a simple single-sign-on service, and Knox is the first company to apply this type model to residential real estate investing.”

Rent tech-focused RET closes first fund; pours $5M into management platform SmartRent

Published November 13, 2018

Today, Real Estate Technology Ventures (RET Ventures) announced the final close of $108 million for its first fund. RET focuses on early-stage investments in companies that are primarily looking to disrupt the North American multifamily rental industry, with the firm boasting a roster of LPs made up of some of the largest property owners and operators in the multifamily space.

RET is one of the latest in a rising number of venture firms focused on the real estate sector, which by many accounts has yet to experience significant innovation or technological disruption.

The firm was founded in 2017 by managing director John Helm, who possesses an extensive background as an operator and investor in both real estate and real estate technology. Helm’s real estate journey began with a position right out of college and eventually led him to the commercial brokerage giant Marcus & Millichap, where he worked as CFO before leaving to build two venture-backed real estate technology companies. After successfully selling both companies, Helm worked as a venture partner at Germany-based DN Capital, where he invested in companies such as PurpleBricks and Auto1.

Speaking with investors and past customers, John realized there was a need for a venture fund specifically focused on the multifamily rental sector. RET points out that while multifamily properties have traditionally fallen under the commercial real estate umbrella, operators are forced to deal with a wide set of idiosyncratic dynamics unique to the vertical. In fact, outside of a select group, most of the companies and real estate investment trusts that invest in multifamily tend to invest strictly within the sector.

Now, RET has partnered with leading multifamily owners to help identify innovative startups that can help the LPs better run their portfolios, which account for nearly a million units across the country in aggregate. With its deep sector expertise and its impressive LP list, RET believes it can bring tremendous value to entrepreneurs by providing access to some of the largest property owners in the U.S., effectively shortening a notoriously lengthy sales cycle and making it much easier to scale.

Photo: Alexander Kirch/Shutterstock

One of the first companies reaping the benefits of RET’s deep ties to the real estate industry is SmartRent, the startup providing a property analytics and automation platform for multifamily property managers and renters. Today, SmartRent announced it had closed $5 million in series A financing, with seed investor RET providing the entire round.

SmartRent essentially provides property managers with many of the smart home capabilities that have primarily been offered to consumers to date, making it easier for them to monitor units remotely, avoid costly damages and streamline operations, all while hopefully enhancing the resident experience through all-in-one home controls.

By combining connected devices with its web and mobile platform, SmartRent hopes to provide tools that can help identify leaks or faulty equipment, eliminate energy waste and provide remote access control for door locks. The functions provided by SmartRent are particularly valuable when managing vacant units, in which leaks or unnecessary energy consumption can often go unnoticed, leading to multimillion-dollar damage claims or inflated utility bills. SmartRent also attempts to enhance the leasing process for vacant units by pre-screening potential renters that apply online and allowing qualified applicants to view the unit on their own without a third-party sales agent.

Just like RET, SmartRent is the brainchild of accomplished real estate industry vets. Founder and CEO Lucas Haldeman was still the CTO of Colony Starwood’s single-family portfolio when he first rolled out an early version of the platform in around 26,000 homes. Haldeman quickly realized how powerful the software was for property managers and decided to leave his C-suite position at the publicly traded REIT to found SmartRent.

According to RET, the strong industry pedigree of the founding team was one of the main drivers behind its initial investment in SmartRent and is one of the main differentiators between the company and its competitors.

With RET providing access to its leading multifamily owner LPs, SmartRent has been able to execute on a strong growth trajectory so far, with the company on pace to complete 15,000 installations by the end of the year and an additional 35,000 apartments committed for 2019. And SmartRent seems to have a long runway ahead. The platform can be implemented in any type of rental property, from retrofit homes to high rises, and has only penetrated a small portion of the nearly one million units owned by RET’s LPs alone.

SmartRent has now raised $10 million to date and hopes to use this latest round of funding to ramp growth by broadening its sales and marketing efforts. Longer-term, SmartRent hopes to permeate throughout the entire multifamily industry while continuing to improve and iterate on its platform.

“We’re so early on and we’ve made great progress, but we want to make deep penetration into this industry,” said Haldeman. “There are millions of apartment units and we want to be over 100,000 by year one, and over a million units by year three. At the same time, we’re continuing to enhance our offering and we’re focused on growing and expanding.”

As for RET Ventures, the firm hopes the compelling value proposition of its deep LP and industry network can help RET become the go-to venture firm startups looking to disrupt the real estate rental sector.

Keyo modernizes housing with rent auto-pay that boosts your credit

Published March 9, 2018

There’s nothing we spend more money on for a worse experience than housing. Keyo wants to fix all of it. The audacious startup envisions a world where a building’s other tenants get $20 to show you an available apartment on your schedule. Where you auto-pay your rent online. Where you get local business perks and can communicate maintenance requests through an app. And where… Read More