US: San Francisco-based startup Lyric has closed all but one of its locations offering furnished short-term rental units since the start of the Covid-19 crisis, and its co-founder, Joe Fraiman, has now confirmed that he has departed for personal reasons.
Lyric, which has raised around $180 million to date, including a $160 million Series B round last April with Airbnb, has been heavily impacted by the pandemic, just as other master lease players have been forced to lay off staff or even shut their doors permanently in recent months. The boutique suite provider has shuttered all of its locations in the United States bar one, and will now focus its attention on developing software and pricing tools for accommodation, according to Forbes.
In early March, before the industry felt the full brunt of the pandemic, Lyric announced it had laid off around 20 per cent of its staff [at least 25 employees].
It was previously operating close to 600 units in 14 cities, offering those out to business travellers in key locations across the United States. When the redundancies were announced four months ago, it said it would continue to manage units in New York City, San Diego, Philadelphia, New Orleans, Miami, Charlotte, Austin and Washington DC, after closing in Houston, Dallas, Pittsburgh, Orlando, Minneapolis and Chicago.
The latest twist this week saw Lyric co-founder and president, Joe Fraiman, confirm to Forbes that he had left the business on Wednesday. When asked about whether the startup would still be operating in a year’s time, he said that “predicting the future a year out is hard”.
Since launching in 2014, Lyric had caught the attention of a number of high-profile real estate investors and venture capital funds, including RXR Realty, Starwood Capital Group CEO Barry Sternlicht, Tishman Speyer, NEA, SignalFire, FifthWall and Tusk Ventures. However, now that business has dried up due to lockdowns and restrictions imposed on international and domestic travel, Lyric’s fate might depend on keeping its one remaining location in Manhattan open and pivoting to selling software including its pricing tool, Wheelhouse, which calculates room bookings.
Elsewhere, competitors in the master lease space have also been forced to take drastic action to survive or support their long-term strategy once the Covid-19 pandemic does reside.
One of the most recognisable names, Sonder, announced it was laying off 22 per cent and furloughing an additional 11 per cent of its workforce in March, before the hospitality unicorn closed a $170 million Series E round with Fidelity, Inovia Capital and former Airbnb CFO Laurence Tosi’s WestCap Group, which took its overall valuation to $1.3 billion.
Austin-based boutique short-term rental and hotel operator The Guild laid off 38 of its 175-strong workforce in the same month and has been negotiating a rent concession from its landlords. The company secured $25 million in a Series B funding round as recently as January, and had raised $50 million since launching in 2018.
Meanwhile, Spokane-based apartment rental startup Stay Alfred closed down in May, less than two months after saying it was closing its properties for eight weeks to limit the spread of the coronavirus. Its most recent major funding round came in October 2018 when it raised $47 million to continue its expansion across the United States.
Fraiman said he would look to launch another real estate tech business in the future but is now taking a step back due to personal circumstances in his family.