Read the full pitch deck an NYC apartment-rental startup that’s looking to disrupt brokers’ fees used to raise $5.7 million from VCs and landlords
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- Apartment leasing company Doorkee raised a $5.7 million round this spring from a mix of VCs, like Alpaca VC and Alpha Edison, and New York City landlords.
- Doorkee uses a combination of software and the departing tenants to facilitate the apartment leasing process, incentivizing departing tenants to give notice earlier and show their apartment to prospective renters.
- Doorkee CEO and cofounder John Fagan walked Business Insider through the pitchdeck.
- Visit Business Insider’s homepage for more stories.
While fundraising during a pandemic has created a whole slew of new problems, real estate tech startup Doorkee’s recent $5.7 million fundraise was actually bolstered by the challenges of coronavirus.
Doorkee replaces a typical leasing broker with a combination of leasing software and help from the departing tenant, who is incentivized to give 90 days advanced notice of when they’ll vacate an apartment and then show the apartment to prospective tenants. Doorkee pays them when a tenant they toured signs a lease.
While real estate agents weren’t able to show apartments during the height of coronavirus restrictions, leases still ended and tenants had to move. Doorkee, which bypasses rental brokers entirely, was primed for this situation.
The company’s first fundraising round, which included funds from New York City landlords Stonehenge, Simon Baron Development, and Bushburg Properties as well VCs Alpha Edison, and Alpaca VC (formerly Corigin Ventures, which recently spun out of landlord and developer Corigin), was already in motion before the crisis, but the company’s fit to the moment caused more money to flow in.
“A big chunk of this funding came in March and April, right at the height of the coronavirus scare,” John Fagan, CEO, and cofounder, told Business Insider. The company also came out of beta mode in April of this year, opening up their product to any New York City landlord.
Doorkee’s business model was birthed out of Fagan’s own experience renting in New York City, which has both a very fast rental turnaround time and high broker fees for apartment hunters.He wanted to search for an apartment months in advance, but the fast turn around time made it so that he would have to wait until the month before he moved out to find a new apartment.
Doorkee tackles this problem by focusing on the three different stakeholders in the transaction: the landlord, the apartment hunter, and the person leaving the apartment.
For departing tenants, they get paid 2.5% of their yearly rent, or about a third of their monthly rent, when a tenant they toured signs a lease. Those prospective tenants are able to sign a lease on a new apartment months in advance, avoiding the stressful reality of finding a new apartment in less than a month.
The landlord’s two biggest concerns are reducing the amount of time an apartment is vacant between tenants, and lowering the cost of broker fees. By marketing the apartment earlier than is typical, Doorkee hopes to reduce vacancy. Landlords pay 5% of the annual rent as a fee for the service, half of which Doorkee pays to the departing tenant. Typical brokers charge landlords one or two months of rent for their service, or about 8-17% of the annual rent.
As a lawyer for retirement plan company Voya Financial, Fagan along with his cofounder didn’t have a real estate background, which he said was helpful in coming up with the idea, but made it more challenging to implement.
“Not having real estate experience was a double edge sword,” Fagan said.”It took us a lot longer after identifying the problem, we had to take one and a half years to get the lay of the land.”
Fagan said this is also one of the main reasons why the company decided to look for investment from potential clients, New York City landlords, who were able to guide the young company through the real estate world.
At the moment, Doorkee is focused on New York, but plans to expand to a few large markets in 2021, and eventually expand nationwide.
Fagan walked Business Insider through the pitchdeck that Doorkee used to fundraise the round. Fagan also used Business Insider’s pitch deck library to find examples of successful pitchdecks while he was first tinkering away at fundraising for the company.
Doorkee’s pitch deck is below.