The median monthly rent for an apartment in Manhattan has jumped to $3700; most property managers and owners have a 40x annual income requirement, meaning that prospective tenants would need to be earning at least $148K a year with a significant credit history. This makes securing an apartment unattainable for many even though they are otherwise qualified, especially for ex-pats, students, recent grads, and entrepreneurs. TheGuarantors is an insurtech solution where the company serves as a co-signer, guaranteeing payment to landlords for a nominal fee. The company also offers a security deposit product where renters do not have to keep thousands locked away in an escrow account. In an extremely tight housing market, TheGuarantors serves the needs of both renters by giving them more options that they qualify for and property managers by reducing risk through guaranteed payments. The company has provided over $1.5B in total coverage since inception, streamlining the lease process by 22 days for a property, and coverage is available in 49 states, available for properties from property managers and developers like Brookfield, Equity Residential, Tishman Speyer, Rockrose, and Silverstein Properties. Despite turbulence in the market from COVID, TheGuarantors was able to triple revenue in 2021.
AlleyWatch caught up with TheGuarantors CEO and Cofounder Julien Bonneville to learn more about the business, the company’s strategic plans, latest round of funding, which brings the total funding raised to $76.7M, and much, much more…
Who were your investors and how much did you raise?
We raised $50M in a Series C equity funding round, led by Portage Ventures, joined by Kensington Capital Partners, Arch Capital Group Ltd., Roosh Ventures, as well as returning investors including Alven. This will allow us to build several new products and increase the size of teams that will enable our future growth.
Tell us about the product or service that TheGuarantors offers.
Launched in 2015, we’re working to improve the financial lives of the millions of American households who rent their homes by making leasing more accessible and affordable.
We have two flagship products that help to create a smart, fair, and human rental experience for customers. Lease Guarantee allows renters access to the homes they might not otherwise qualify for, and our Security Deposit Replacement acts as a direct and highly affordable substitute to a cash security deposit.
What inspired the start of TheGuarantors?
Upon moving to New York from France to attend graduate school, I experienced the frustration that so many face when they have found a great apartment but don’t meet standard landlord qualifications. Recognizing this broader need to address the issue of rental housing access, I launched TheGuarantors to empower renters. Since 2015, we have helped renters across the country move into the apartment of their dreams, while having more money on hand when moving in.
How is TheGuarantors different?
We’ve invested massively in developing proprietary, state-of-the-art machine learning technology that is exceptional at fairly and accurately identifying risk, because lack of credit history or inability to meet standard qualifications doesn’t necessarily mean you are a bad tenant. The high quality of our underwriting allows us to be the only operator in our space with the trust of multiple A-rated insurance carrier partners. Our biggest priority is to deliver exceptional value to our customers, so we have also invested significant resources towards customer service, eliminating stress and uncertainty for renters and landlords throughout the entire process.
We’ve invested massively in developing proprietary, state-of-the-art machine learning technology that is exceptional at fairly and accurately identifying risk, because lack of credit history or inability to meet standard qualifications doesn’t necessarily mean you are a bad tenant. The high quality of our underwriting allows us to be the only operator in our space with the trust of multiple A-rated insurance carrier partners. Our biggest priority is to deliver exceptional value to our customers, so we have also invested significant resources towards customer service, eliminating stress and uncertainty for renters and landlords throughout the entire process.
What market does TheGuarantors target and how big is it?
TheGuarantors targets millions of American households nationwide. The 46 million households renting their homes have a collective $65B locked away in security deposits. Additionally, we estimate that five million households will struggle to get approved for a new rental unit this year based on their finances.
Our core products have a total addressable market of $10B and our future products will expand our potential reach even further.
What’s your business model?
With our Lease Guarantee and Security Deposit Replacement products, renters pay a small upfront or monthly fee and TheGuarantors insures the landlord for lost rent and/or damages. This proves beneficial to both parties.
What are your post-COVID office plans?
We are delighted to have recently moved into our new offices at One World Trade Center in New York. We offer a hybrid work model and are seeing a clear uptick in the number of people returning to the office.
What are the biggest challenges that you faced while raising capital?
We saw that downward pressure on publicly traded tech stocks impacted the private equity funding environment. Fortunately, our excellent unit economics and financial standing inspired strong confidence in our sustainability and continued growth.
What factors about your business led your investors to write the check?
As the largest player in our space, we are the first choice for property managers looking to improve financial and operational performance. We’ve built a business with solid unit economics, strong growth, and impressive EBITDA. They’re investing in a resilient business that has doubled revenue annually since inception and tripled revenue in 2021, amidst chaos in the market during COVID. Based on these strong fundamentals, we have recently launched our own licensed insurance company, making us the first VC-backed company in our space to do so. Our product value also speaks for itself; properties offer our product as a benefit to their residents, at zero cost to the landlord.
As the largest player in our space, we are the first choice for property managers looking to improve financial and operational performance. We’ve built a business with solid unit economics, strong growth, and impressive EBITDA. They’re investing in a resilient business that has doubled revenue annually since inception and tripled revenue in 2021, amidst chaos in the market during COVID. Based on these strong fundamentals, we have recently launched our own licensed insurance company, making us the first VC-backed company in our space to do so. Our product value also speaks for itself; properties offer our product as a benefit to their residents, at zero cost to the landlord.
What are the milestones you plan to achieve in the next six months?
We’re actively preparing to launch a series of new financing and insurance products on our platform, amid a strong inbound appetite from landlords for TheGuarantors to offer even more financial solutions to their renters.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
I would advise companies to have a sense of urgency and secure investors soon, as the tech funding environment could change quickly. If it does, the capital will allow them the flexibility to weather any potential storms.
Where do you see the company going now over the near term?
We plan to quadruple the size of our engineering team and aggressively hire across product, sales and marketing functions. We will invest heavily in our technology and product capabilities to further integrate into landlords’ workflows and systems and build ever more cutting-edge solutions.
What’s your favorite outdoor dining restaurant in NYC?
I’m a fan of Big Tiny in Carroll Gardens, Brooklyn. It offers quite a large outdoor seating area and delicious traditional French cuisine. At TheGuarantors we’re all about helping people find home and this spot reminds me of my own!
