August 30, 2016
by John Mannes
Cozy, a platform to streamline interactions between property managers and renters, closed an $8.5 million Series B today led by American Family Ventures, with participation from Social Capital, General Catalyst and all other investors that participated in the company’s $1.5 million Series A in 2012.
Despite the fact that our homes are becoming “smarter” by the day, the way in which we lease them is anything but smart. Many property managers still use their personal emails to communicate with tenants, listings are spread across dozens of sites and nearly every interaction between renters and property managers occurs on a different platform — or worse, no platform at all.
Cozy simplifies the rental management process for landlords and takes the pain out of apartment hunting and landlord interaction for renters. The service powers recurring monthly payments and a suite of diligence tools.
“We see people get Cozy set up and running, and we may not see them sign in for a year,” said Gino Zahnd, CEO and co-founder of Cozy.
That kind of user metric would be scary for most any other startup, but for Cozy, it’s a sign its service is fixing the problem it set out to solve.
Zahnd explains that property management software can be divided into two key target markets. While a quarter of property managers service large portfolios of properties, 75 percent of managers oversee fewer than 20 units. Zahnd launched Cozy to service the second group.
Without a marketing budget, Cozy was able to get 75,000 landlords to sign up 100,000 properties on the platform. Instead of buying ads, Cozy bought another startup, Landlordology. The service is essentially Khan Academy for wannabe property managers. The move made a lot of sense early in the growth of Cozy because landlords were driving user growth on the free platform. A renter couldn’t use Cozy unless their landlord was using Cozy. The service remains free, but new plans to monetize specific services has altered the original customer acquisition strategy.
Cozy is now processing more than $500 million per year in rental payments as one of four revenue streams. The company also sells credit reports and background checks in addition to a new express payoffs service for landlords. For $2.99 per unit per month, landlords can get automated clearinghouse payments processed in two days instead of five. Landlords also can easily export transactional data directly to QuickBooks or Excel. All of this amounts to additional features that the company can use to target both renters and landlords.
In addition to the above strategies, today’s investment from American Family Ventures, the strategic venture arm of American Family Insurance, is a strong signal that the company will roll out future services to serve the insurance needs of renters and property managers.
With the addition of insurance to an already formidable collection of data, Cozy could power new features that could eventually match renters directly with properties. Zahnd agreed that the data being accumulated on the platform will ultimately allow for the creation of new services for both renters and landlords, but noted that the immediate road map doesn’t involve data just yet.