Williamsburg has been hit with some serious luck – and we are not referring to the dreaded L train shutdown that didn’t happen – we are talking about Stake. This NYC startup for renters, launching first in Williambsurg, has created the first every loyalty platform for apartments. Stake renters earn a monthly rent match – up to 10% of their rent – that is invested in a real estate index, providing a return on a decision to rent. This Return on Rent is a win-win for renters, owners, and brokers, and it’s the first startup that is built as a response to the growing millennial trend to rent rather than purchase. While the hospitality and travel industries have been successfully rewarding customers for years, nothing like this has been done for living – one of your largest expenses – until now.
AlleyWatch interviewed cofounder and CEO Rowland Hobbs to get the exclusive details about Stake’s launch and recent funding.
Who were your investors and how much did you raise?
This was an angel round investment, led by The Real Company, who has investments in Property Technology and co-living. We raised over $900K
Tell us about the product or service that Stake offers.
Stake is the first loyalty platform for apartments. A win-win for renters, owners, and brokers through Stake’s proprietary Return on RentTM.
Return on Rent is simple: Stake residents earn a monthly rent match—up to 10%—that is invested in a real estate index. Their security deposits are invested too. The longer residents stay, the more they earn. We call that Return on Rent: a reward for living in the home and neighborhood that you love. We offer additional services to owners, matching renters to their ideal property to reduce the vacancy period.
What inspired you to start Stake?
An entire generation is more inclined to rent than ever before; in fact, we saw that renting, especially in cities, has become a long-term lifestyle for the coveted millennial generation.
An entire generation is more inclined to rent than ever before; in fact, we saw that renting, especially in cities, has become a long-term lifestyle for the coveted millennial generation.
However, the real estate industry hasn’t evolved to cater to this lifestyle, and renters are left with a pretty crummy journey – it’s hard to find the right properties, and it’s an investment to move into a new apartment with broker fees and security deposits. Renters additionally spend up to 50% of our take-home income on rent and get nothing in return. Owners, meanwhile, struggle with rental turnover and lose over $100B reacquiring renters. We believe there is a third way between renting and owning and that we can create real estate equity for all.
After a year of studying the neighborhoods we live in, we saw an opportunity that focuses on rewarding living in the neighborhoods we love and not moving. With Stake, rent isn’t gone, it is invested – renters win because their rent turns into equity.
How is Stake different?
Stake is the first and only way to be rewarded for renting and earn equity as you rent. We are also the only loyalty platform for property owners and managers to keep vacancies lower.
What market does Stake target and how big is it?
We are targeting apartment rentals, which is worth over $500B in annual rent payments in the United States. Our first neighborhood will be Williamsburg, Brooklyn.
What is the most difficult aspect when convincing landlords to partner with Stake?
Landlords are only one leg of the stool. Property managers and rental brokers are the other two legs. This ecosystem has not had an enterprise-grade loyalty platform before—like hotels, or airlines have had—and that requires a shift in mindset from a “one size fits all” acquisition approach, to a “reach the right renters, at the right time, with the right offer.” Thankfully, we offer a compelling model that allows them to grow their business while also better serving their renters.
What’s your business model?
We partner with property owners and charge 1-3% of the annual rent when the property owners and managers save money on the Stake platform. Our services are free to renters.
What was the funding process like?
We were fortunate to have early angel investors in the real estate world that believed in our business model, team, and the market we were targeting. As we refined the concept, we found Real Company who increased their investment as they saw the product evolve, and the growth opportunity. Finally, we had former colleagues in technology and loyalty who knew the sheer potential of introducing retention marketing into the real estate industry.
What are the biggest challenges that you faced while raising capital?
Angel rounds are pre-product, so you’re describing the platform not showing, which presents its own set of challenges.
At the same time, you’re developing the concept so quickly you need to keep contacts along the ride. We created a “Week of” newsletter to our angel investors to keep them informed of any developments.
What factors about your business led your investors to write the check?
Very early investors believed in the idea and in us as cofounders. Later, strategic investors believed in the market and saw that we had the potential to grow into the co-living, multifamily, and other real estate portfolios. Our last investors believed in the market: loyalty in residential real estate, creating an additional incentive for renters to commit to units long term.
What are the milestones you plan to achieve in the next six months?
We are launching in Williamsburg, Brooklyn soon, and those interested can visit Stake.rent, sign up now as members to receive updates on new units, and calculate your potential Return on Rent. Those who sign up will receive priority access to our first apartments with Return on Rent – only members will have access to curated listings in what we’re calling “Drops.”
We are launching in Williamsburg, Brooklyn soon, and those interested can visit Stake.rent, sign up now as members to receive updates on new units, and calculate your potential Return on Rent. Those who sign up will receive priority access to our first apartments with Return on Rent – only members will have access to curated listings in what we’re calling “Drops.”
Behind the scenes, we have signed up property owners, managers, and brokers to both list vacant units and give current renters access Return on Rent with Stake.
Our goal is to have 10% of the core of Williamsburg rentals on the platform.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Early stage companies should be creating movement with their investors as much as with their customers, including them in the process of development and ensuring that they always have an eye on growth. Don’t just look at traditional venture sources. Look to who can be a perfect customer, investor, and advisor in one.
Where do you see the company going now over the near term?
This year, we want to grow our footprint to 10% of core rentals in Williamsburg, Brooklyn and launch in one additional neighborhood by year’s end. The neighborhood-by-neighborhood growth is also core to our model: part of building renter loyalty is fostering a sense of community, and we believe in tailoring each experience to each neighborhood to build a better relationship between owner and renter in addition to offering them economic benefits.
Where is your favorite bar in the city for an after work drink?
Our offices are in the Garment District, so we’ve been hitting Fine and Rare if we’ve got something to celebrate!
