SAN FRANCISCO, Oct. 1, 2019 — Naborly, the Y Combinator-backed credit bureau for the rental industry that offers free credit and background checks to landlords and tenants, and helps tenants build credit by paying their rent; today announced the close of its $7.5 million seed round. The round was led by First Round Capital’s Bill Trenchard (Uber, Looker, Flexport, LiveOps) and Susa Venture’s Chad Byers (Flexport, Robinhood, Newfront Insurance), with Joe Montana’s Liquid 2, Village Global VC, Assurant Insurance and Third Prime filling the round.
In addition to the funding, the company also announced the U.S. and Canada-wide launch of NaborlyShield, a digital service that guarantees rental income and lease terms for landlords and tenants. NaborlyShield eliminates the need for landlords to collect a security deposit or require a co-signer as it protects against unforeseen events such as rent default, early vacancy, late rent and property damage. This alleviates the cost and frequency of evictions.
According to RedFin, there are more than 2.2 million evictions in the U.S. each year. Conservative estimates place the annual total cost of damages and lost revenue between $25 and $35 billion in the U.S. alone. Naborly’s economic researchers and actuarial team has been studying eviction data and rental application trends for three years prior to launching NaborlyShield, and found that the majority of evictions could be eliminated or mitigated if tenants had better financial services available to them in the event of an emergency.
“It’s incredibly expensive to be poor in America. The least privileged people pay the highest interest rates and service fees, while offered the fewest options. Not because they don’t repay their debts, but because they do,” said Dylan Lenz, CEO and founder of Naborly. “Research shows the average person in this country is one missed week of work away from a financial emergency. If their kid gets sick or their car breaks down, they get pushed into a financial crisis that costs a lot more than the few hundred dollars they need to get by. Meanwhile, they are paying thousands each year in interest and fees to predatory lenders and financial service providers, which perpetuates the systemic cycle of being broke.”
Due to Naborly’s data and underwriting advantages, the average NaborlyShield protection contract costs just 2% to 5% of the annual rent, making NaborlyShield 50% to 75% less, on average, from similar products in the market.
“This problem is a symptom of our financial system. We realized we needed to build a solution from the ground up, so we took a three-pronged approach,” says Lenz. “First, we rebuild the credit bureau system with free and fair credit that helps tenants build credit by paying their rent. Second, is an insurance-like product where we co-sign or guarantee leases so that all tenants can access sustainable housing. And finally, we extend a low-interest line of credit in those worst-case scenarios to help tenants avoid eviction before they occur.”
“Naborly is reimagining the relationship between landlords and tenants by leveraging the power of technology and data. We see a world where Naborly is the glue for the rental industry, improving the lives of tenants, while providing landlords better data and financial security,” said Chad Buyers, general partner at Susa Ventures. “We are thrilled to be working with Dylan and his team at Naborly to build a next-generation financial services firm focused on the rental industry.”
Last year, Naborly graduated the Y Combinator (YC) startup program where it made the drastic move of killing its existing revenue model and pivoting away from the tenant screening industry’s standard business model of paying per report or background check. Naborly instead opted for a 100% free model for both landlords and tenants in order to help stop housing discrimination and to accelerate their viral growth. The team also forwent YC’s Demo Day to focus on continued product development, expanding its services nation-wide and optimizing customer acquisition before making its aggressive strategic approach widely public.
As a result, Naborly has grown exponentially to more than 850,000 rentals in just 18 months, making it one of the fastest growing PropTech companies in existence.
Naborly is reinventing credit and financial services for landlords and tenants by offering a free platform that helps landlords know who they are renting to before they move in, while helping tenants build credit by paying their rent. NaborlyShield is a digital service that landlords or tenants can purchase to have Naborly guarantee the terms of the lease agreement, pay the rent if the tenant does not, offer the tenant flexible and low-interest payment options to avoid eviction and handle the entire eviction process in the worst-case scenario of a full eviction.
Naborly was founded in 2016 by Dylan Lenz, and today serves more than 850,000 rental units across the U.S. and Canada with offices in San Francisco and Toronto, Canada. The company has raised $7.5M of funding as of September 2019 with investments from First Round Capital, Y Combinator, Susa Ventures, Trinity Ventures, Assurant Insurance, Village Global, Liquid 2, SV Angel, Ryan Petersen (Flexport), Sterling VC and Third Prime Capital.
Contact: Brenda Manea