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Home London Tech Talk #LondonTech

Lavanda Raises Another $7.25M for its Property Management Platform for Flexible and Short-Term Rentals

London TechWatch by London TechWatch
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With the pandemic ushering in flexible work from home options where location is no longer critical, the popularity of short-terms has exploded. Property managers and landlords have scrambled to accommodate this new dynamic. Lavanda is a property management platform that is built specifically to address the needs of flexible, short-term, and medium-term rentals.  The all-in-one solution automates inventory management, marketing, distribution, and design, allowing property operators to reduce vacancies, diversify their revenue streams, and increase demand.  Renters are able to receive tailored solutions that match their needs without the onus of a long-term lease.  Short-term rentals are estimated to be 30% more profitable for owners and investors than traditional leases. Leading real estate companies like Greystar, Blackstone, Hines, Nuveen, and Aldar are all Lavanda clients.

London TechWatch caught up with Lavanda CEO Fred Lerche-Lerchenborg to learn more about the inspiration for the business including an interesting pivot story from laundry, the company’s strategic plans, latest round of funding, which brings the total funding raised to $15.6M, and much, much more…

Who were your investors and how much did you raise?

The investment round was led by leading European proptech and fintech venture capital firm Finch Capital, with participation from US-based Starwood Capital, a global leader in real estate investment, via European venture partner Concrete VC. $7.25M of additional growth capital was raised.

Tell us about your product or service.

Founded in 2015, Lavanda’s award-winning property management software makes it easy for owners and operators of residential apartment buildings to outperform conventional rental yields by enabling them to rent out their apartments by the day, week, month or year.

Our vision is to become the de facto technology platform for powering more flexible, accessible and affordable living.

What inspired the start of Lavanda?

Lavanda initially started out as an on-demand laundry app in London. Within a few months of trialing the service, the overwhelming majority of demand came from a very specific customer niche – Airbnb hosts and short-term rental operators. These customers were using Lavanda to solve the complex pain point of turning around linens between guest stays. These businesses were all growing very fast – however on closer inspection many of them were largely illegitimate (operating in breach of planning restrictions, mortgage terms, tenancy agreements, building insurance policies, etc.). Furthermore, they were not leveraging technology effectively to solve their primary challenges. This discovery led Lavanda to identify a clear need for a property management solution (B2B SaaS) to enable large blocks of apartments (specifically multifamily/build-to-rent and purpose-built student accommodation blocks) to capitalise on emerging (and rapidly growing!) demand for hospitality-led short and medium-term rentals – however in a way that was both a) legitimate, and b) hassle-free for the operator. By addressing and removing these two barriers, operators have the missing toolkit they need to significantly improve the performance of residential buildings, offering customers a better, more flexible rental experience whilst addressing structural inefficiencies within the building (i.e. vacant units and slow lease-up periods).

Fast forward, and today Lavanda counts a growing number of the global real estate industry’s biggest corporations as customers, with clients across North America, Europe, Middle East, and Australia.

How is it different?

The Lavanda platform leverages technology and data to identify and solve structural inefficiencies within each building. The Lavanda property management system (PMS) optimises and automates: building configuration (which apartments within a building are made available for short/medium/long-term tenancies); revenue management; distribution and marketing of accommodation inventory; attracting and retaining renters with improved flexibility and convenience; and the design and delivery of highly customised, digital-first hospitality experiences.

What market you are targeting and how big is it?

The Lavanda platform focuses on the specific needs of the multifamily, student accommodation, coliving, and serviced apartment sectors where the company’s rapidly growing global customer base includes leading institutional players Greystar, Blackstone, Hines, Nuveen, and Aldar alongside many others. Over time we expect to expand our solution to serve other residential real estate asset classes, further expanding our addressable market. The global apartment market today counts in excess of 100M units globally and is growing at >5% YoY.

What’s your business model?

Lavanda generates revenue by charging a fixed monthly fee per unit on our platform. Alternatively, should customers not want to commit to a fixed monthly fee, Lavanda also offers a revenue share model where the company charges a % of the rental income powered by the platform.

What are your post-COVID office plans??

Having been fully remote throughout the pandemic, we are moving to a hybrid office model. We have a central London office space where relevant teams work from 1-3 days each week. People are then able to work remotely/from home as much as they wish, and we are also supporting employees by providing them with access to local remote coworking spaces.

What was the funding process like?

It was ultimately successful, but it was far from straightforward! We are a travel/hospitality business that was raising money in a pandemic! We underwent extensive due diligence and the process took more than 6months from start to finish.

It was ultimately successful, but it was far from straightforward! We are a travel/hospitality business that was raising money in a pandemic! We underwent extensive due diligence and the process took more than 6months from start to finish.

What are the biggest challenges that you faced while raising capital?

COVID significantly impacted our transactional revenues, so the major challenge was getting investors to understand this, see past it, and appreciate the value of the business we are building.

What factors about your business led your investors to write the check?

  1. We are an experienced and committed leadership team.
  2. We have a very clear product vision, fuelled by a very deep understanding of the industry we are disrupting.
  3. We have incredible traction, which includes growing the business by 5x during Covid.

What are the milestones you plan to achieve in the next six months?

  • Exceed £1M of revenue in a month.
  • Increase market penetration in North America, Europe, Middle East, and Australia
  • Strengthen both our executive leadership and our non-executive board with key hires.

What advice can you offer companies in London that do not have a fresh injection of capital in the bank?

Always prepare for the worst, whilst hoping for the best! The world remains full of uncertainty. Often the more you need the money, the more it will cost you, so try and avoid sailing too close to the wind.

Where do you see the company going now over the near term?

Our goal in the near term is to establish Lavanda as the de facto flexible rental technology platform globally. We plan to do this by: a) continuing to roll out with our existing customer base, and b) continuing to expand rapidly within our strategic markets of North America, Europe, Middle East, and Australia.

What’s your favourite outdoor activity in London?

Walking along the South Bank at the weekend, seeing the stands, and taking in the sights. Then heading to Borough Market for an amazing lunch!


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Tags: Finch CapitalFred Lerche-LerchenborgLavandaStarwood Capital Group
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