Sydney property management startup Hometime has bagged $6.7 million as it capitalises on the global short-term letting trend and strives to cement itself as a leader in the Aussie ecosystem.
This latest round is led by NAB Ventures and AS1 Capital, and comes in addition to the $6 million in combined debt and equity funding it secured in May this year.
At the same time, Hometime has announced the acquisition of two similar Aussie businesses, consolidating its presence in the Australian short-term letting space.
Founded in 2016, Hometime manages properties rented through platforms such as Airbnb, and last year secured a marketing partnership with the US giant.
The startup now supports hosts in eight Aussie cities, and in Auckland.
In the 12 months leading up to October 2019, the startup saw a massive 300% growth in revenues, co-founder and chief William Crock tells StartupSmart.
It’s on track to hit between $13 million and $14 million in annualised revenues by the end of the year, he adds.
A scale game
Needless to say, it’s been a busy year of “pretty back-to-back fundraising” for Hometime, but the founders were focused on ambitions to continue their growth drive, Crock says.
“It was quite important that we ensured we were well capitalised.”
And, while it’s been both “stressful and exciting”, he admits it hasn’t been plain sailing from day one.
Hometime is not, strictly, a Software-as-a-Service startup. It’s a services startup, he explains. And so, the core of the business is not in the tech, it’s in “delivering a five-star guest experience”.
That experience has to apply across all the geographies Hometime operates in.
“There’s a big challenge in ensuring consistency, alignment, making sure all your people are motivated, incentivised, and have the right tools to deliver on the company goal,” he explains.
“That’s where we’ve spent a lot of time and investment … how can we optimise this business model?”
The answer the team landed on is to focus on empowering the people on the ground — whether they’re changing the sheets in a property or managing communication with the client.
“That person is absolutely incentivised, aligned, has the right tools, the right training to deliver this service,” Crock says.
“All of a sudden, that becomes scalable.”
This is what has driven Hometime’s explosive growth, and now interest from sophisticated institutional investors.
“And that’s indicative of this industry globally. There’s a huge amount of investor interest at the moment,” he adds.
Ears to the ground
At the same time, Crock has been keeping an eye on global trends in short-term property rental management, in the wake of trailblazer Airbnb.
“The industry is moving super quickly, and we’re seeing the emergence of some pretty large players overseas, particularly in the US and Europe,” he says.
One thing that stands out to him is the move towards consolidation.
“It’s almost inevitable — because it’s a very young, fragmented industry — some smaller players start to join together to remain competitive,” he explains.
“Then larger players start to acquire as a way to increase market share, but also to enter new markets.”
All of this leaves Hometime in a unique situation. While Australia is “a fantastic market” with a huge amount of Airbnb properties, “there is a lack of well-capitalised players here”, he says.
“We have an opportunity to use that to our advantage and to continue to acquire local businesses.”
Hometime has scooped up Host My Home, a Cairns-based business managing about 130 properties, and Melbourne-based Bnbpal. And Crock says we can expect to see more activity on this front in the next 12 months or so.
“It’s a really ripe market for further consolidation, and there are a lot of small players in the 50-property range that will benefit, and would like to be a part of something bigger,” he says.
“So we’ve got our ears to the ground and eyes up.”
The founder will also be investing in the technology platform, to make sure it can manage any upcoming integrations, and will also be working on driving international growth. The plan is to move into either the UK or US market in 2020, he says.
But, if we look further into the future, Crock is still evaluating his options.
With Hometime operating in a strong market, and international players becoming increasingly better capitalised, “there could very well be a takeover bid for the main player in Australia”, he hints.
“We’re obviously open to those discussions and we have good relationships with these key players in Europe and the US,” he adds.
“But, we want to focus on building a fantastic business from a unit economics perspective, and also be able to demonstrate growth.”
A new Aussie giant
To say it’s been a busy year for Hometime would be an understatement. But, having closed two rounds in quick succession, Crock warns startups to “always double your time estimates”.
“Don’t ever expect funding to be completed in a couple of months, unless you’re a Canva or a SafetyCulture,” he says.
Also, he warns founders that if they think the more funding rounds they do, the easier it will become, they’re sorely mistaken.
“As you move up in terms of size of rounds, and you have more sophisticated investors, the complexity on the deal also tends to increase,” he says.
“Each time it’s a learning curve.”
And, as to whether Hometime will be up there in the realm of Canva and SafetyCulture one day, Crock has high hopes.
“There’s no reason we can’t grow this business to that kind of proportion. There’s a huge market, we’re really excited about the growth prospects,” he says.
“It’s such a young industry, there’s been no tech or scale applied to it yet. So, there’s definitely room for a massive Australian player.”