Need to rent an apartment in NYC? It’s not an easy task with stringent rental qualification requirements. Those that are deemed unqualified renters are normally composed of recent grads, students, expats, and entrepreneurs who are trying to find an apartment but face barriers like high upfront cost and strict credit requirements. TheGuarantors is the NYC insurtech startup that helps this demographic secure leases through its innovative solution that’s shaking up the traditional security deposit system. This team comprised of real estate risk experts who ensure landlords are protected from renters that will not default on their lease payments. TheGuarantors manages all of the underwriting and claims processes for its programs in-house.
AlleyWatch spoke to CEO and founder Julien Bonneville about expanding TheGuarantors platform to 40 states and expanding the offering to include services like Securiti™, a security deposit replacement product for commercial office leases, and the company’s recent funding round, which brings the total funding amount to $26.7M across four rounds.
Who were your investors and how much did you raise?
Series B Round: $15M. Main investors include Global Founders Capital, White Star Capital, Alven Capital, and Partech.
Tell us about the product or service that TheGuarantors offers.
Residential: Our first product was the Lease Guarantee—offering a way for unqualified renters to secure the apartment they want. We have helped thousands of expats, students, and entrepreneurs gain access to apartments that would otherwise be difficult to obtain due to high upfront cost and strict credit requirements.
Since the Lease Guarantee took off, we have developed a full suite of products. Our additional two residential products include a Security Deposit Replacement -offering augmented coverage to landlords at affordable prices for tenants- and Renters Insurance Compliance- offering automated compliance software to landlords and an easy renters insurance purchasing experience to tenants. Our products are currently offered in 300,000+ residential units across the country.
Commercial: Our latest offering, Securiti™ is a security deposit replacement product for office leases.
The revolutionary product is the first of its kind, offering attractive off-balance sheet financing to tenants while bridging the negotiation gap between landlords and tenants when it comes to security deposits. From a tenant view, it’s a cheaper alternative to a business loan, with Securiti™ costing ~50% less than traditional financing alternatives.
The revolutionary product is the first of its kind, offering attractive off-balance sheet financing to tenants while bridging the negotiation gap between landlords and tenants when it comes to security deposits. From a tenant view, it’s a cheaper alternative to a business loan, with Securiti™ costing ~50% less than traditional financing alternatives.
What inspired you to start TheGuarantors?
After moving to the US as an international student at Columbia, I discovered that credit history requirements made it incredibly difficult to rent an apartment. To address this challenge, I launched TheGuarantors and developed our capstone Lease Guarantee product that allows unqualified renters to access the apartment they want.
How is TheGuarantors different?
We pride ourselves on our commitment to understanding risk, particularly within the real estate industry. As such, we manage all of the underwriting and claims processes for our programs in-house, unlike our competitors who do not directly oversee underwriting. Since our platforms initial launch, we have worked to achieve an unmatched industry reputation with landlords. This reputation allows us to expand the platform across the nation, and in doing so, we have seen exceptional receptivity in each new market and with each new product. As a result, the full breadth of the platform sets the company apart from competitors.
With respect to the Securiti™ office product, there is no product such as ours. The closest competitor is a traditional bank loan, which falls short of meeting the needs of both landlords and tenants.
What market does TheGuarantors target and how big is it?
Our Lease Guarantee offering is most popular for those who may not meet a landlord’s traditional lease requirements. This includes expats who may not have a credit history in the US, students who do not have a responsible party to act as a guarantor, recent graduates who may not have an income history, and entrepreneurs/self-employed individuals who often cannot prove their full income.
Our two other residential products are applicable to all renters, which is a market size that is worth an estimated $5B.
The ideal customer for Securiti™ is a small to medium-sized business with up to ~$200M in revenue. The product provides an alternative solution to traditional office security deposits. As a result, businesses looking to maintain their capital vs. posting it to their landlord or bank for a security deposit are the ideal customer. Securiti™ is sector agnostic. The market size $10B in annual revenues.
How has the business changed since we last spoke after your series A round in 2017?
In 2018, we launched residential security deposit replacement and renters insurance offerings, adding to the suite of products designed to help landlords further reduce risk when finding tenants. Our product Securiti™ introduces us to the commercial market. Furthermore, the platform was activated in less than 7 states at the beginning of 2018. Presently, it is live in 40 states nationwide and continues to grow nationally.
What’s your business model?
From a risk perspective, we partner with insurance companies to carry the risk of the policies we sell. We have partnered with several carriers for the residential offerings and with Chubb for the Securiti™ product. We receive a commission and engage in profit sharing with our carrier partners.
From a distribution perspective, all of our products are sold in a B2B2B or B2B2C fashion, meaning that intermediaries between ourselves and the tenants (brokers, landlords, transaction lawyers) are the ones referring us business. The model creates efficiency as we seek to leverage the whole leasing and property management ecosystem.
What factors about your business led your investors to write the check?
We have built a robust residential platform, and we have proven our strength, our brand, and our expertise, while establishing ourselves as a market leader. We reached profitability after just a few months, while growing by more than 4x annually over the past 3 years.
We have built a robust residential platform, and we have proven our strength, our brand, and our expertise, while establishing ourselves as a market leader. We reached profitability after just a few months, while growing by more than 4x annually over the past 3 years.
What are the milestones you plan to achieve in the next six months?
We are looking forward to furthering geographic expansion of our residential business and increasing our brand recognition in all major cities nationwide. Our goal is to reach activation in half a million units by mid-2019.
For our commercial product, we hope to see Securiti™ recognized as the best alternative to traditional office security deposits and a mainstay in the commercial leasing process.
Where is your favorite bar in the city for an after-work drink?
Barely Disfigured, in Carroll Garden, for its very European atmosphere!
