Frontdesk raises $7m in venture round funding
US: Milwaukee-based tech-enabled short-term rental startup Frontdesk has announced the closing of a $7 million “oversubscribed” venture round of funding led by Stormbreaker Ventures.
The latest investment brings the brand’s total funding to date to $18 million.
Joining the advisory board of the company as an advisor and investor will be Sean Conway, former co-founder and CEO of Pillow [acquired by Expedia], and Daniel Cohen, former co-founder and CEO of Daydream Apartments [now Sentral], as an advisor.
Kyle Weatherly, co-founder and CEO of Frontdesk, said: “When Stormbreaker approached us this Spring, we had the cash flow to grow in line with our lofty expectations, but this preempted venture round gives us the ability to scale exponentially. Given how strong the demand has been for our tech-enabled short-term rental platform, we saw more opportunity to grow than anticipated.
“Ultimately, we decided to ‘fuel the fire’ and emerge from the pandemic as leaders in the booming short-term rental space. The influx of capital will drive further growth to both our management and our technology businesses, fulfilling the demand that is in our lap with short-term stays now exceeding pre-pandemic numbers,” he added.
The new funding will help the next-generation hospitality brand continue its unprecedented growth – now operating in 35 US cities with over 250 employees. In addition, Frontdesk plans to accelerate its burgeoning software business, Frontdesk Flex, serving the growing market of professional short-term rental property managers with a full suite of proprietary and white-labeled technology solutions. The same solutions enabled their brand to achieve such rapid and profitable scale, such as a property management system, direct booking engine, dynamic pricing algorithm, access control, task management, and more.
Stormbreaker Ventures managing partner Said Mia said: “Not only has Frontdesk succeeded in achieving rapid scale, but they have done so in a way that is five to ten times more capital-efficient than their peers, showing vastly superior underlying unit economics.
“Sonder, for example, required 35x more capital to achieve only eight times Frontdesk’s scale; meanwhile, other brands have raised $50 million+ with less scale than Frontdesk. As a result, we’re confident in the company’s ability to fundamentally change the way consumers live, work and travel in a post-pandemic era, with their capital-light and tech-forward model,” added Mia.
Frontdesk says that it expects to double its portfolio in 2021 while also turning profitable in 2022.
Today, the company is present in 35 US markets in more than 160 buildings with over 700 fully managed suites. Austin, Philadelphia and Nashville are its newest markets, having been added in the Spring.
Jesse DePinto, co-founder and chief product officer of Frontdesk, said: “We believe that the lines between where you live and where you stay are continuing to blur and that the future of urban living will be more flexible and more digital. In a world where people can work from anywhere, we are finding that they often choose not to work from their home.
“The pandemic forever changed how we work, and now, as a result, short-term rentals and subscription living are redefining the way we live. Frontdesk is uniquely positioned to cater to this modern traveller, whether it’s for just one stay or one year of stays across our network of tech-enabled luxury suites,” he added.
DePinto spoke to ShortTermRentalz on the funding announcement:
[DePinto] $7 million is your largest funding round to date – will your approach to driving growth change with this investment or do you intend to continue scaling exponentially?
“Yes, and we’re very excited! The additional financing has not changed our core mission, nor has it changed our sustainable approach toward growth, but it has allowed us to move faster. Given the incredible demand, we’re seeing today for our network of apartments, speed and scale matter.”
[DePinto] How is urban tourism going to rebuild itself in the post-pandemic landscape?
“The shift toward remote work is a meaningful change in our society that I think we have only begun to fully realise. We believe that this shift will spur enormous changes in terms of where we choose to live, work and travel, and how long we choose to stay.
“Overall, the future of urban living and travel is becoming more digital and more flexible every day, where new use cases that were previously unimaginable, like subscription travel and flexible living, are being adopted at an accelerated pace.”