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Kleiner Perkins leads $30 million raise for Zumper to meet short-term flexible rental demand – londonbusinessblog.com

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One consequence of the COVID-19 pandemic is that more people had the flexibility to work remotely, which meant they also had more flexibility to live where they wanted.

As a result, more people chose to move – temporarily or permanently – to other cities.

For online rental marketplace Zumperthis meant a shift in user demand. The San Francisco company has historically connected tenants with landlords on long-term leases, with short-term rentals making up only a very small part of its business.

But in 2021, as more people started exploring other locations, Zumper saw that “a significant portion” of its tenants were looking for more flexible options, such as monthly or hybrid leases.

For strangers, a hybrid lease is usually for one to six months without a permanent contract. It can also be described as “a perpetual lease,” in the sense that tenants have short notice periods to leave.

“We saw that our users wanted more flexibility in their lives,” says CEO and co-founder Anthemos “Anth” Georgiades. “Some just want to be nomadic and some just want to try out different neighborhoods before committing for the long haul.

Last year, Zumper had about 1 million listings and over 70 million users. Of those 70 million, about a third were looking for short-term rentals of apartments, hotels or condos, according to Georgiades. To better cater to that subset of users, Zumper today announces what: the founder describes as a ‘rebirth’.

To that end, the company has raised $30 million in a Series D1 funding round led by Kleiner Perkins to aid it in its efforts to improve its product to better serve people seeking short-term rental options.

The financing actually closed earlier this year, but will only be announced today. Goodwater, Greycroft and other unnamed investors also participated in the financing, bringing the company’s total to nearly $180 million.

Zumper had raised $60 million in a series D round in March 2020. Despite the latest increase being an extension of that round, Georgiades told londonbusinessblog.com that the company saw a “significant step” in valuation. (Usually the ratings are flat when overtime rounds are increased).

The executive declined to disclose the figure Zumper is currently valued at, but sources familiar with the company’s internal operations told londonbusinessblog.com it is now “above $500 million.”

He did say that most of the money went to financing product development towards all of the above trends. Already, Zumper has added more than half a million short-term listings to meet customer demand.

With a push toward short-term rental offers, Zumper invades Airbnb territory? Airbnb, in particular, also changed course during the pandemic by offering more extended stays on its platform.

Recognizing that there is “some overlap”, Georgiades said Zumper is “focused on helping people find living spaces versus Airbnb which aims to help people find a place to stay, often when they are traveling or on vacation.”

“Airbnb has done a great job in the pandemic that focuses on flexible rentals,” he told londonbusinessblog.com. “We see a slightly different approach to flexible rental with significantly lower rates for renters and most of our users staying one to six months compared to a stay. I wouldn’t say we’re going up against Airbnb, nor are we trying to get into the vacation space against them, but we do see an opportunity as a real rental platform to deliver something different in this flexible world.”

Ilya Fushman, a partner at Kleiner Perkins, notes that the venture firm has invested in each of Zumper’s funding rounds since its inception in 2012, starting with a $1 million seed round announced that year. two weeks after launch in a public beta at SF Disrupt. Other lenders in that early funding were Andreessen Horowitz (a16z), NEA and Greylock.

“Finding a home is a fundamental need and must evolve with the way people live and work today,” Fushman wrote via email. “Zumper has built a modern, highly flexible, cost-effective and high-quality inventory experience that helps people find the best places to live.”

He further described Zumper as “the first real estate marketplace to offer annual, monthly, and nightly rental options in geographic areas that people desire.”

“People renting homes today are focused on mobility, flexibility and a high-quality software experience, and Zumper delivers it all,” added Fushman.

Investors were attracted by what Georgiades described as a post-vaccine “explosion” of tenant interest in 2021.

That explosion resulted in: double-digit year-over-year sales growth, he said.

With a self-described mission to make renting “as easy as booking a hotel”, Zumper competes with publicly traded Zillow, Apartments.com and CoStar.

The company makes money by asking multi-family and single-family landlords to subscribe to the platform to get their inventory for Zumper’s users. For example, it partners with companies like Blueground to bring its furnished apartments to the attention of more potential tenants. While it feels like a SaaS offering because hosts typically pay Zumper through annual contracts, Georgiades describes its long-term offering as “a classic advertising company.” In the short run, it’s a bit more transactional, with the company charging a fee at the time the rental is booked at an average of 10% of the booking value generated.

But because they don’t want to make the same mistake as many other companies that saw pandemic-related bumps in business, Zumper isn’t putting all the eggs in one basket.

“Long-term rentals remain our core offering,” Georgiades said. “At the same time, we have am absolutely convinced that flexible is here to stay. I don’t think demand will get back to what it was last year, but it’s still a huge segment that’s underserved with no one really building a marketplace for it, and we think that’s a great opportunity.”

The rental market is a hot item these days. Last week, legendary firm Andreessen Horowitz wrote its largest-ever individual check, worth $350 million, to Flow, Adam Neumann’s new rental real estate firm. That company, unlike Zumper, wants to be a real estate management company.

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