Rental-management startup Hometime has raised $1.5 million in seed funding to disrupt the long-term rental market by making short-term renting lucrative and hassle-free.
The Sydney-based startup offers property management services for Airbnb users and other players in the short-term rental market, with the goal of delivering its users “above market returns” for their short-term rentals compared to what they could earn in the long-term rental market, according to co-founder and chief executive Dave Thompson.
The startup’s two core offerings are a full-management style service that prices, markets and manages a user’s short-term rental, and a housekeeping service, which helps users with the upkeep and cleaning of their rentals between guests.
The latest funding round adds to $500,000 in seed funding raised by Hometime late last year from unnamed angel investors, according to Thompson, and the cash injection will be used to “turbo charge the growth” of the startup in Sydney and Melbourne, as well as further expanding its reach in Australia.
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The startup will also be “aggressively hiring” new talent to expand its current team of 15, says Thomson.
For Thomson and co-founder William Crock, securing investment for this round, which was led by tech accelerator Asia Principal Capital, came down to preparation.
“You want to get your investment material pretty polished,” Thomson advises, noting that startups looking to raise must have “have some really good traction” and be prepared to show these metrics to investors.
“You definitely want to put your heads down and focus on getting that traction — that’s when you go to market because you can prove you’ve got a product or service people are willing to buy,” Thompson tells StartupSmart.
Since launching in 2016, Hometime has been growing its user base “at a double-digit rate” per month and has already serviced 500 properties across Sydney and Melbourne, according to Thompson.
Disrupting the rental market
Short-term rentals have become increasingly popular in Australia thanks to the likes of Airbnb and Stayz, and startups like Hometime and MadeComfy are capitalising on this boom, with the latter drawing the attention of high-profile investors such as Amaysim co-founders Rolf Hansen and Peter O’Connell, as well as former LinkedIn Australia managing director Cliff Rosenberg.
“We’re playing in a pretty attractive, topical space — any business that is directly aimed at servicing that [Airbnb-style] platform is going to be in high-demand,” Thomson says.
The popularity of the short-term rental space has seen Hometime aiming to lure property owners away from long-term rentals by “deliver[ing] them higher than expected yields versus what they could do in the long term,” according to Thompson.
“It takes longer than expected”
Startups looking to secure funding should look ahead and be prepared for capital raising to take some time, according to Thompson.
“Leave adequate time before you anticipate you might be running out of capital [to start pitching to investors],” Thompson says.
“Go out to markets and try to hit as many [investors and customers] as you can — it takes longer than expected.”
While the process of raising funds for Hometime “moved swiftly” from meeting investors to executing a term sheet, according to Thompson, he says not all startups will be so lucky, and they should prepare themselves for the eventuality of an extended fundraising process.
“Getting paperwork [in order] and money in the bank all takes a bit longer that you’d expect. Leave yourself a bit of buffer room,” he says.