PropTech startup Mashroom, which delivers an end-to-end automated lettings and property management service, raised 4m GBP
London, 29th July 2020 – a London-based PropTech startup Mashroom, which delivers an end-to-end automated lettings and property management service, raised 4m GBP from BBB’s Future Fund and current investors, which brings their total funding to 7m GBP.
Mashroom goes beyond the tenant-finding service and incorporates the entire rental lifecycle all under one roof, from property advertising, arranging viewings, credit history checks, maintenance, to end of tenancy, and handling potential disputes between landlords and tenants.
The self-service platform enables landlords to list their property and for tenants to rent it easily. The whole process including time spent on credit and reference checks can take less than 2 hours, as the platform also allows to sign rental agreements and renew contracts online in just a few clicks.
Open banking technology makes rental payments seamless, automated and secure for tenants while offering real-time payment information for landlords. Mashroom has also developed a Deposit Replacement Product, an alternative to the traditional deposit, that sees tenants simply pay one week’s rent while offering landlords even more protection than a regular deposit – up to 12 weeks protection compared to 5 weeks with a traditional deposit.
This product also reduces the cash burden for tenants as they don’t have to front the deposit and lock it away for the duration of the tenancy. The Deposit Replacement Product is underwritten by global A+ rated insurer Arch Capital Group, together with Mashroom’s other insurance services such as rent guarantee, and emergency insurance. Contents insurance is underwritten by Ageas, one of Europe’s largest insurers.
For the parts of the rental process that still require a human touch, Mashroom connects departing tenants with incoming tenants directly. The platform enables landlords to enlist the help of their current tenant, who then shows the property to prospective tenants. On a successful let outgoing tenants receive a reward of one week’s worth of rent for their efforts, which in turn provides transparency between landlords and tenants while helping reduce void periods. The cost for landlords is approx. 2% of the annual rental income which is more than 5x cheaper than average letting agent fees.
The platform sits beside Mashroom’s property sales and mortgage business making Mashroom a full-stack residential property platform. The basic service is free for tenants and landlords whilst the company covers its costs via its financial products offering which includes deposit replacement, advance rent, and insurance products. Recent funding will help the company accelerate its growth and invest in further enhancing the platform.
In the UK, over £50 billion of rent is collected annually, with lettings fees equating to up to 25% of rental income per year, landlords are increasingly looking for new options in the market. Mashroom provides a solution that is free to use, meaning landlords can let their property without involving agencies and incurring lettings fees. With over three quarters of the rental market controlled by high-street agents, Mashroom is working to change the mentality around rental transactions and remove dependency on letting estate agents. Despite the pandemic effect Mashroom which was launched in Feb 2020, has already over 4000 landlords and tenants signed up to the Mashroom mailing list.
Mashroom makes renting easy. Mashroom’s unique end-to-end property letting platform benefits both landlords and tenants. It combines technology with community to deliver a better, more efficient way to let, secure, and maintain a property. The company was founded in 2018 and has raised 7m GBP to date.
For more information please visit www.mashroom.com.
Q&A with Founder Stepan Dobrovolskiy
When were you founded?
We incorporated Mashroom Ltd in June ’18 and raised our first funding that August. But in terms of the founding, I’d say that happened about a half a year before that in early 2018 – that’s when I began putting my time, energy and salary into the business.
When did you launch?
We launched beta in February 2020, a month before COVID-19 hit. After so much hard work you can imagine what that felt like! But we’d had lots of interest from landlords (our primary customers) in our first month, which gave us plenty of feedback and uncovered some bugs. So we decided to use the lockdown hiatus in order to fix the bugs and speed up our branding. The updated platform has been up and running for a couple weeks now.
Who are the founders? (inc. background if relevant)
I am the sole founder. Prior to Mashroom I was with Kite Ventures for a few years and invested in companies like Delivery hero, Tradeshift, Plated, Sponsorpay and others. Having said that, Mashroom wouldn’t be where we are today if it wasn’t for the ambitious and entrepreneurial team – especially our first employee, Alexander Badalyan, who joined in Feb 2018.
How are you funded?
On the back of my VC experience I raised £1M (equity) in August ’18 from Kite LPs network. Since then we have closed 2 more convertible loans in the amount of £6M (including £2M form BBB’s Future Fund).
Problem you are trying to solve and how do you solve it?
Letting and renting is, for the most part, still a fragmented, bricks-and-mortar industry (it’s really the perfect phrase!). The experience as a landlord or tenant normally still involves a traditional estate agent who acts as intermediary and charges a hefty fee. While plenty of new players have come along with tech to solve certain points in the experience, we are the first to look at the entire process from end to end.
Mashroom has now basically digitalised 98% of the rental journey, from property advertising to viewings, receiving offers, referencing and credit checks, deposit collection, agreement signing and rental payments. Unlike most traditional agents, we are also still there to help after tenants move in – things like maintenance requests, insuring contents, moving out or extending contracts at the end of the tenancy.
But we fundamentally believe that automation and tech should augment rather than replace human interactions in this market, and a big part of our brand is to create better relationships between landlords and tenants.
That’s why, for example, we have an integrated product that incentivises tenants to help landlords with viewings at the end of their tenancy, and they get one week’s worth of rent as a reward. No one knows a property better than people who actually live in it, and it removes a lot of friction to have current tenants schedule and host viewings at times that suit them. This costs less than 2% of annual rent for landlords, compared to paying 10%+ to an estate agent for finding a new tenant. So we are unlocking financial benefits for landlords and tenants at the same time as giving them more flexibility.
Typical user or customer? (Give a few example, if helpful)
We are in a supply-driven market, so I would say our main customer is a professional landlord with a few properties under management, but we have been careful to create a really accessible platform for non-professional landlords who can easily handle letting themselves. We also appeal to tenants – they can find a new home on our platform and we incentivise current tenants by making them ambassadors, giving them an active role in the rental process and rewarding them for helping with viewings.
Who are your most direct or main competitors? What makes you different/better?
We compete with every agent on the market, but probably the most direct competitor is Openrent. Openrent’s aim is to put property on portals like Zoopla and Rightmove, for us that’s just the beginning of the process – we have digitalised the rest of the letting and renting experience as well, right up to renewing contracts or moving out and re-listing the property. We are talking DIY letting and renting to the next level by connecting people to the technology that makes it faster, cheaper and more accessible.
How do you make money?
Mashroom’s platform is free to use for landlords and tenants, and that’s a key part of our brand aim to improve the letting and renting ecosystem. We also have a few fintech products which make us a handy one-stop shop for rental transactions. Our main product is Deposit Replacement. We have partnered with Arch Capital to develop our own scheme and now offer 12 weeks protection to Landlords instead of traditional 5 weeks. Tenants only need to pay a fee of 1-week’s worth of rent, which removes the financial burden of moving in. We also have Contents, Rent Guarantee, Building, Home Emergency insurances, our own in-house mortgage brokerage (we do buy-to-let mortgages as well and refinancing for landlords) and other products like certificates, photos, inventories – basically everything one might need to rent or let property.