US: Real estate technology startup Kasa Living, which provides tech-powered flexible accommodations, short-term rentals inside hotels and multifamily properties across the United States, has announced that it has raised $50 million in funding.
The capital raise includes $30 million in new Series B funding led by Ribbit Capital and $20 million in Series A funding led by FirstMark Capital less than a year ago. Participating investors also include RET Ventures, Zigg Capital, Allegion Ventures and BoxGroup.
Kasa claims to be leading a new wave of innovation in the hospitality industry, leveraging its proprietary technology and institutional expertise to transform vacant and under-utilised real estate into high-quality, trustworthy accommodations for travellers. To date, the company has entered into management agreements with multifamily and hotel property owners in 35 markets across 15 states, enabling its partners to unlock new streams of income and realise the full potential of their buildings.
Roman Pedan, founder and CEO of Kasa, said: “We see a generational opportunity to innovate in a beleaguered travel sector. Kasa aspires to build a global accommodations brand beloved by guests, indispensable to property partners, and desired by neighbours.
“This raise allows us to grow our technology team significantly to power a flexible and distributed hospitality offering that delivers on our mission,” he added.
Over the past nine months, Kasa said that it had maintained occupancy rates of approximately 75 per cent [more than double the hospitality industry average], expanded units under management by 50 per cent, and launched in five new cities. The increase in market share, together with monthly revenues climbing 50 per cent since December, catalysed a significant increase in Kasa’s valuation in connection with its most recent round.
Kasa is planning to accelerate investment in proprietary technology, building on its existing suite of products and systems that has enabled the company to manage units across various property sizes and locations. By leveraging its platform, Kasa has generated positive operating margins, even amid historic hospitality industry lows, while maintaining exceptional guest experiences at an affordable price point in a way that was never before possible.
Looking ahead, the company says will redouble its efforts to streamline operations and minimise onsite overhead through cutting-edge features that focus on community safety, guest support, and the Kasa travel experience at all touch points.
Nick Shalek, general partner at Ribbit Capital, said: “What Kasa customers see is just the tip of the iceberg. The enormous operational complexity behind the scenes is tackled by Kasa’s technology platform, allowing them to seamlessly host a large, diverse, and growing network of distributed accommodation units efficiently.
“In defining a new, software-driven way to deliver high-quality hospitality, we see Kasa doing to hotels what Amazon Web Services [AWS] did to on-premise servers,” he added.
In addition to creating a seamless experience for guests, Kasa aims to provide an end-to-end solution for its property partners.
Lela Cirjakovic, executive vice president of operations at multifamily owner and operator, Waterton, said: “We selected Kasa as our short-term rental provider of choice after an exhaustive search. Kasa stood out for its relentless focus on the community and partnership.
“Their innovative process and technology help us provide a better neighbour and guest experience, and ultimately a more harmonious community,” she added.
Pedan was previously an early member of KKR’s Private Equity Real Estate team. He founded Kasa in 2016 alongside pursuing his MBA at Stanford’s Graduate School of Business and was joined by ex-Airbnb Product leader Craig Minoff, who now oversees Product & Operations at Kasa.
Adam Nelson, managing director at FirstMark Capital, said: “Kasa has thrived because of its ability to leverage its technology and operations footprint to deliver a strong value proposition to guests while driving superior profitability to their property partners. This trend has accelerated during the pandemic as travellers leaned even more heavily into the reliability, cleanliness, and contact-less check-in available in every Kasa and property owners needed to fill vacancies quickly to deliver reliable, above market cash flows.
“We’re excited for Kasa to continue to build the operating system that powers its ability to set the standard for guest satisfaction in this sector, and to power short-stay operations for a diverse set of properties across the US, and eventually globally,” he added.
Dave Eisenberg, founding partner at Zigg Capital, said: “We were initially attracted to Kasa in 2018 by their passion for their mission, their unusual depth of expertise in the combination of real estate, hospitality and technology, and their hyper capital-efficient approach to growth. More recently, we’ve been blown away by how the team has rapidly adapted its operations, technology, and business model to a new Covid-19 world.
“As a result, they are the rare hospitality company on track to surpass its pre-Covid-19 2020 forecast. In our experience, companies that are able to navigate challenging business environments with alacrity, professionalism, and grace demonstrate the traits that give them a shot at growing into globally respected leaders,” he added.
Christopher Yip, partner at real estate technology-focused venture capital firm RET Ventures, said: “Kasa has demonstrated a unique ability to align with property owners and operators including a consistent strategic focus on management and profit-sharing agreements as well as an ability to help monetise “long tail” inventory, which has further separated the company from other short-term rental providers.
“The team’s dedication to continually refining its model based on feedback from clients — and its commitment to creating a market-leading technology stack to improve the guest experience — convinced us that Kasa was an ideal fit for our portfolio,” he added.