Technology is fundamentally changing the concepts of work, play, and live. When it comes to living, as work becomes more connected, more and more people find themselves traveling for extended periods of time and do not want to deal with an impersonal hotel or traditional corporate housing situation. Enter Blueground – the startup founded in 2013 to provide modern, tech-enabled apartments to renters for a period of at least 30 days. Not only is the rapidly growing company a hit with business travelers, but the company has also found a niche amongst those who want the flexibility to change where they live frequently and do not want to be bogged down by owning furniture. The company offers accommodations in 9 cities presently with an inventory of over 3000 apartments available.
AlleyWatch sat down with Blueground CEO and Founder Alex Chatzieleftheriou to learn more about the company’s rapid growth, future plans, and latest round of funding, which brings its total funding raised to $78M.
Who were your investors and how much did you raise?
We recently closed a $50 million Series B funding round led by venture capital firms WestCap Investment Partners and Prime Ventures.
Tell us about the product or service that Blueground offers.
Blueground offers beautifully designed, tech-powered apartments for stays starting from one month and up to a year or more.
What inspired you to start Blueground?
I founded Blueground in 2013 after I spent 5 years traveling from city to city as a consultant, living almost exclusively in hotel rooms. As you can imagine, being confined to such small spaces gets old fairly quickly, not to mention the amount of money my employer at the time was spending on accommodations (an amount that exceeded $10,000 per month in some cases). However, alternative options were limited and hardly made sense for my situation: it was impossible to find an apartment to lease for less than a year, and even if you could, you’d have to furnish the place or compromise with the few available, typically unattractive furnished options. This experience sparked the idea that there needed to be a better way for people to rent apartments and live when their occupations require them to move from city to city. From this, Blueground was born and we’ve been helping people feel at home wherever they choose to live ever since.
I founded Blueground in 2013 after I spent 5 years traveling from city to city as a consultant, living almost exclusively in hotel rooms. As you can imagine, being confined to such small spaces gets old fairly quickly, not to mention the amount of money my employer at the time was spending on accommodations (an amount that exceeded $10,000 per month in some cases). However, alternative options were limited and hardly made sense for my situation: it was impossible to find an apartment to lease for less than a year, and even if you could, you’d have to furnish the place or compromise with the few available, typically unattractive furnished option.
What’s been incredibly exciting for me is, as the business has grown, we’ve uncovered a second segment of guests that are served just as well by Blueground. These are guests who are looking for a long-term stay (12+ or more), who are really attracted to the inherent convenience and seamlessness that Blueground provides. These tenants tend to be asset-light and love the fact that with Blueground, the possibility of moving to a new neighborhood or a new city is easy and seamless.
How is Blueground different?
For stays of just a few months, Blueground has a 30-50% lower price tag versus hotels while our guests enjoy three times the space. All Blueground apartments are beautifully designed, tech-powered, fully equipped and come with a consistent, high level of service compared to renting other available furnished apartments.
Blueground provides guests a completely turnkey living solution that they can easily reserve online with a few taps on their phones. Every Blueground apartment is thoughtfully and beautifully designed and includes premium furnishings, high-speed WiFi, luxury linens, and everything needed to simply show up and start living. Our guests have access to ongoing support through the Blueground app — which provides easy access to a suite of value-added services such as cleaning, maintenance and an easy relocation function that allows guests to experience new apartments in different neighborhoods and cities on demand.
What market does Blueground target and how big is it?
Blueground apartments are available in six major cities throughout the U.S. — Boston, Chicago, Los Angeles, San Francisco, New York City and Washington, D.C. — as well as Athens, Istanbul, and Dubai. At present, our portfolio includes a collection of 3,000 beautifully designed apartments across nine markets. Our goal is to have a presence in 50 cities around the world and a portfolio of more than 50,000 apartments by 2023, something that we’ll begin to work toward with the opening of London, Paris, and Seattle before the end of this year.
What’s your business model?
Blueground leases carefully selected apartments, upgrades them into best-in-class rentals with fully-furnished amenities and offers them to residents and business travelers looking for a medium-to-long-term living solution (one month to five years). For landlords and property management companies, Blueground provides an easy and cost-effective solution for leasing unoccupied units. The company leases multiple units before they hit the market, ensuring steady cash flow and value-added financing solutions that maximize a property’s annual yield. For tenants, Blueground uses tech to automate all aspects of the experience. Once the online reservation is made, tenants have access to guest support through the Blueground app. Value-added services are available including cleaning, maintenance, bill payment and an easy relocation function that allows guests to experience new apartments in neighborhoods across the city. We also put a large emphasis on developing our own internal technology to help us operate the business efficiently and effectively. Without our internal tech tools, we would not be able to offer the seamless experience and consistent level of service that our guests know to expect from Blueground.
How has the business changed since we spoke after your last funding in the Spring?
Since our funding round in the spring, our focus has been to continue to grow and scale our core business. As we double down on growth in our current markets — adding more amazing apartments for our guests — we’ve also turned our sights to expanding into new cities. We’ve also made additional investments to improve our technology and product — such as our tech product (website, guest app and internal tool that allows us to seamlessly scale our business) and the design and experience of our apartments. Another big area of growth has been our team — we’re now 400 strong and growing every day. As the business continues to expand, it’s essential that we continue to create a great culture that attracts great talent.
What was the funding process like?
We spoke to a number of investors across the United States and Europe (knowing that these regions are focus areas for us in the coming years.) Blueground received a lot of interest from investors right off the bat due to the exciting sector we’re in and how large the market size is. That interest sustained because of the strong traction Blueground has made thus far in terms of growth, capital efficiency and technology developments.
What are the biggest challenges that you faced while raising capital?
Raising capital always takes a lot of time and effort in terms of initial outreach, and these hurdles only increase as you move onto the term sheet and undertake the necessary due diligence. Beyond the time that goes into the process, it can often be challenging to identify the right investors – for us that meant a team that would be willing and able to both invest capital and help the business in critical areas of growth. Though this isn’t always easy, finding the right partner is essential to the success of the company. We’ve been incredibly lucky that our investors, both from this round and previous rounds, are great partners to Blueground.
What factors about your business led your investors to write the check?
We’d like to think there is a long list of reasons, but what it really came down to was Blueground’s track record of high growth, the fact that our first cities are already profitable and how capital efficient we’ve been thus far. It, of course, didn’t hurt that we have a stellar team to boot!
What are the milestones you plan to achieve in the next six months?
Our guests have spent more than 1,000,000 nights to date with us. 10,000 guests have selected a Blueground apartment as their home since 2013. On the property owners’ front, we have partnered with more than 2,000 landlords and operate 3,000 apartments across 9 cities around the world.
The recent $50 million funding round will mostly support our continued growth in two areas. Firstly, it will fuel our continued expansion and the launch of Blueground in 20+ cities. Secondly, it will be deployed to increase our team of engineers, data scientists, product managers, and designers. Our proprietary technology includes our web-facing application that allows prospective guests to find an apartment and book same-day; our mobile application that lets guests manage their entire stay through their mobile phone; our internal operations system that allows us to manage our business in an efficient and consistent way across the world; and our data-centric pricing and asset selection applications.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
When a company raises capital, there is typically an expectation to move into a hyper-growth mode soon after. For the teams that do not raise capital, it makes sense to take advantage of that time to focus on product/market fit, strengthening unit economics and improving internal efficiencies. It is a fantastic opportunity to work on these aspects before you secure a funding round since post-fundraising teams typically do not have the time or bandwidth to do so!
When a company raises capital, there is typically an expectation to move into a hyper-growth mode soon after. For the teams that do not raise capital, it makes sense to take advantage of that time to focus on product/market fit, strengthening unit economics and improving internal efficiencies. It is a fantastic opportunity to work on these aspects before you secure a funding round since post-fundraising teams typically do not have the time or bandwidth to do so!
Where is your favorite fall destination in the city?
I love Central Park. Nothing beats the nature and beauty of the park in the middle of the sprawling city. Every time I’m there taking a stroll or going for a jog, I discover a new part of the park that I have not seen before.