Blueground, a proxy landlord that rents apartments from landlords and then subleases them to business travelers and well-heeled new arrivals, has raised an additional $50 million in a Series B funding round.
The funding round underlines the growing momentum of “iRenters,” startups that apply the business model of iBuyers like Opendoor and Zillow to the rental market.
Blueground was founded in 2015 in Athens, Greece. It now leases out 2,800 units across Athens, New York City, San Francisco, Los Angeles, Boston, Chicago, Dubai, Istanbul and Washington, D.C. And it has plans to expand to London, Paris and Seattle, Blueground CEO Alex Chatzieleftheriou told Inman.
The startup caters to businesspeople and others with fully furnished units and tech-enabled service. It offers flexible leases with a minimum term of 30 days, a threshold that often releases units from short-term rental regulations. Pricing decreases with length of stay. The company’s cheapest studio in New York City is about $2,500, according to Chatzieleftheriou.
Blueground tenants can use a mobile app and website to book a unit, order cleaning services, request maintenance or switch to an apartment in another neighborhood, according to Chatzieleftheriou. With the funding, Blueground plans to double its tech staff 100, he said.
Blueground tenants “prefer the efficiency and seamless experience,” Chatzieleftheriou said. “It’s more expensive than a normal apartment, for sure.”
But for corporations footing the bill for employees on assignment, using Blueground is still cheaper than shelling out for a hotel, he said.
Like other iRenters, Blueground signs long-term leases with landlords that range from one to four years, according to Chatzieleftheriou. Unlike with traditional property managers, this guarantees the landlord steady revenue.
Blueground spruces up the units and subleases them for a premium, earning money on the spread between what it rents the unit for from the landlord, and what it charges the tenant (or the tenant’s employer). This margin generally runs between 15 and 30 percent, according to Chatzieleftheriou.
Chatzieleftheriou said he started Blueground in Athens without being familiar with Opendoor and other iBuyers. IBuyers offer a seamless transaction to homesellers by using technology to quickly buy and resell their homes.
Some other iRenters have credited Opendoor for forging a business model that they’re now applying to rentals.
Doorstead doesn’t lease units from landlords, but it guarantees them a minimum rent, while making “rental offers,” much like the cash offers from iBuyers. Bungalow, which has been called the “renter’s equivalent of Opendoor,” meanwhile, rents homes directly from landlords, and focuses on dicing up apartments into smaller units to rent to young professionals.
Blueground markets its listings on its website and across various long and short-term rental sites, including Airbnb. About 35 percent of its rental revenue comes from bookings through its website, and another 35 percent comes straight from corporate clients, Chatzieleftheriou said. It attracts the rest of its tenants through other sites.
Blueground’s funding round was led by Westcap and Prime Ventures and brings its total financing to $78 million.