(Bloomberg) — Bungalow, an online marketplace for residential real estate, has more than tripled its valuation to over $600 million after raising $75 million in equity funding.
Deer Park Road Management Co. led the round, with participation from existing investors including Coatue, Khosla Ventures, Founders Fund and Atomic, Bungalow co-founder and Chief Executive Officer Andrew Collins said in an interview. The company was last valued at $192 million in 2019, according to PitchBook data.
The San Francisco-based company has witnessed a recovery in demand and rents as young professionals who fled at the onset of the pandemic flock back to larger cities, Collins said. Even during the worst periods of 2020, when rent plummeted in cities like New York and San Francisco, occupancy never dropped below 80%, he said.
“Human connection is a premise that has never been so sought-after,” Scott Burg, Deer Park’s chief investment officer, said in an emailed statement, crediting Bungalow’s ability to provide access to locations coveted by renters.
Bungalow plans to spend its new capital on technology and accelerating growth into new cities such as Phoenix, Orlando, Atlanta, Tampa and Houston. It currently has more than 3,000 residents living in the over 700 properties it manages, Collins said, adding that the startup will seek to grow that figure to over 10,000 residents in the next 18 months. It counts 26-to-30 year-olds as a key demographic, he said.
The company, which provides payment and maintenance features through its app, has diversified away from solely providing shared-housing or co-living options by introducing a “whole-homes” option to help families or friends find rentals. This new line of business currently represents 5% of Bungalow’s revenue, a figure Collins said he hopes will grow to 40% over the next 12 months.
“Our aspirations are to be a much larger residential real estate marketplace,” Collins said. “Renting is historically one of the worst experiences and we were shocked at how antiquated residential real estate remained” referencing what drove him to start Bungalow with co-founder Justin McCarty.
Collins said Bungalow helps landlords obtain higher rental income, in part by recommending light renovations such as the insertion of walls to create additional bedrooms. Some have even bought new homes specifically to list on Bungalow, he said.
The startup, which is not yet profitable, competes against roommate-finder platforms such as Craigslist and social-media platforms, as well as co-living operators such as Common. Its tenants generally have access to common furniture, cleaning and WiFi as part of their monthly payments. They can pay extra to rent bedroom furniture, and can move to other Bungalow properties without breaking a lease.
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