https://www.businessinsider.com/june-homes-used-pitch-deck-to-raise-money-from-softbank-2021-9?r=US&IR=T
See the pitch deck a real-estate startup used to raise $27 million from SoftBank to build the world's largest housing company — without owning any homes
Daniel Mishin wants to turn June Homes into the world's largest housing company — without owning a single home
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See the pitch deck a real-estate startup used to raise $27 million from SoftBank to build the world's largest housing company — without owning any homes

Daniel Mishin wants to turn June Homes into the world's largest housing company —without owning a single home.The real-estate technology startup offers property management for landlords,apartment-hunting tools for renters, and customizable leases for mom-and-poplandlords to use with tenants.On Wednesday, June Homes announced that it has raised a cumulative $50 millionsince its founding in 2017. Most recently, June Homes raised a $27 million Series Bround, led by Softbank Ventures Asia, which comes on the heels of a $10 million seedround and a $13 million Series A. The company did not provide a valuation.Mishin told Insider that the idea for June Homes came from his own challengesrenting an apartment when he moved to New York. Rent is, on average, the largestexpense Americans face. Zillow estimates that renters in the US shell out more than$485 billion a year, according to Zillow.

Scoring a home was not only pricey, he added, it was also hard.At first, Mishin blamed landlords for the hassles, but realized that landlords had toshoulder the costs of broker fees and property management, while still risking thepossibility of default if tenants can't pay. This is especially true for smaller landlords,who don't have the efficiencies of scale and deep pockets that landlords with multipleunits enjoy. Mishin — who formerly founded and sold a portfolio of hostels aroundUkraine and Russia — decided that his new startup could be an "arbitrator" betweenlandlords and tenants. It would, effectively, replace brokers.Now June Homes offers renters in six cities — New York, Los Angeles, WashingtonDC, Boston, Philadelphia and San Francisco — the ability to rent an apartment withina week of signing papers for one to 18 months. The longer the lease, the cheaper themonthly rate. The firm allows renters to decide whether to take the apartmentunfurnished, partially furnished, or fully furnished. Once tenants move in, theycontinue to pay rent through June Homes and use the company's online concierge toanswer any questions or lodge maintenance requests.For its property management and broker-free rental services, landlords either giveJune Homes either a cut of the rent or pay a monthly fee.The company aims to ease the rental experience for middle-income tenants,including digital nomads, the hordes relocating new cities during COVID-19, andyoung professionals who may not have the upfront cash or long-term desire to investin their own furniture.

Mishin walked us through the pitch deck the company used to raise its most recentfunding round from investors including and musician Demi Lovato, FJLabs, Kairos HQ, Scooter Braun's venture capital firm TQ Ventures II, Reshape andQuiet Capital.

June Home's goal is far from modest, shooting to eventually become thelargest housing company. The focus on not owning or leasing property is especially important to keepingexpenses down.The WeWork IPO fiasco in 2019 and the challenges of coworking and short-term rentalcompanies in the early days of the pandemic showed the risks of real estate techcompanies directly leasing space on their own balance sheets.This makes it cheaper, and easier to scale, and while the upside potential may not beas high, it is significantly safer for the company.

Mishin said that one of his first questions while pitching was, "Are you a renteryourself?" Many VCs and angel investors are likely homeowners and may haveavoided the worst of the rental market. Mishin said that renters know at anexperiential level how broken our rental markets are.

This slide is a helpful cheat sheetfor those who don't rent

Affordability, upfront costs, the time and energy to search and apply for a anapartment, lack of flexibility and absentee landlords all contribute to renting'sabysmal net promoter score.

This slide highlight's Mishin's own realization thatlandlords hate rentingalmost as much as renters do.

Property management fees add up, while the idle time between tenants and thechallenge of evicting non-paying tenants leads to a looming threat of default.MIshin said that many current rental standards, like having an annual incomethatis 40x the monthly rent, are outdated systems from the past.

The slide is careful to say that it isn't the only one who can fix these problems, butinstead that it one of many that has a part to play in solving them.

The company's focus on small landlords is somewhat rare for the category

Small landlords mean more sales representatives, more time spent acquiringcustomers, and more time communicating with them in times of crisis or when thereare changes to the business, like during the pandemic. Many other companies havechosen to serve the largest landlords, and minimize their clients, but Mishin seessmall landlords as those who can benefit the most from the tech and services of JuneHomes.

This slide highlights some ofthe main draws for tenants.

The company offers a range of furniture packages, from fully furnished to notfurnished at all, flexible leases, and roommate vetting, which is especially importantif someone can't afford a whole apartment to themselves.

Design also plays a major role in the company's pitch.

Flexibility is key as well. Lease terms are customizable, and June Homeoffers shared or solo apartments that come with various levels offurnishings. The company offers one app for every step ofthe process.

Tenants can use the app to search for homes, book virtual tours, apply for apartments,and sign leases. They can also use it to actually enter the apartment upon move-in.

June Homes' algorithm is centralto its business model, both in how itacquires new landlords as customers and how it attempts to fetch higherrent prices for their apartments.

To find landlords whose units June Homes can spruce up and lease out, the companyuses an algorithm that highlights poorly performing, mispriced, or outdated listingson real-estate websites.The company's business development team works closely with the algorithm'sfindings, reaching out to the landlords to ask them to use June Homes.

The algorithm also suggests design changes that to make in those units to make themmore appealing. The company promises to fix up the apartment using local vendorsand put it back on the market within three days.

The company uses repeatable template designs to keep the upgrades asquick as possible.

The company's designers quickly match a room's characteristics to their differenttemplates, ensuring that units are quickly ready for the market.

The company has studied how to market apartments so thatthey canquickly be rented out, usually justfrom virtualtours.

The company estimates its potential size is a staggering $6.9 billion.

It's not as high as valuations of the largest multifamily real estate investment trusts(REITs), but this potential market size dwarfs any other company that, like JuneHomes, doesn't actually own the underlying assets it rents out.

The company plans to sign 10,000 units over the next 24 months.

The pandemic has caused dislocation and chaos in the multifamily market. At thetime of the pitch, apartments were still priced well below pre-COVID-19 levels. Withrents trending back up, the company could see even more upside through revenuesharing

The company's occupancy rates took a major hitin the early days ofthepandemic, but had mostly recovered by the end of 2020. Mishin told Insider that the company lost a lot of customers in the early days of thepandemic, many of them international visitors who rushed to get back home beforeborders closed. The company quickly moved to connect with each landlord,scheduling biweekly calls instead of sending one-size-fits-all communications.Mishin said that this approach made landlords more open to giving the companysome time to recover. By the end of 2020, Mishin said, June Homes was operationallyprofitable.

This slide has its exact numbers blurred out, but projects the company'splans for big growth over the nexttwo years. The company also guarantees rentfor landlords, swapping outtraditionalsecurity deposits for its own underwriting formula.

The company is so confident in its underwriting formula that it guarantees at leastsome of the rent for tenants that default and are no longer able to rent. Mishin saidthat this underwriting formula is able to underwrite tenants with nontraditionalstreams of income as well."If someone has a full-time job in a startup, a side gig doing something else, andinvests in crypto, how do you even underwrite that tenant?" Mishin said.

The company has announced a slew of recent hires from both big-namestartups like Casper and more established firms like IBM as it exits stealthmode.

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