- Naborly, a known for offering free credit and background checks to landlords and tenants and partnering with tenants to build credit by paying their rent, announced $7.5 million in funding
Naborly — a Y Combinator-backed credit bureau for the rental industry that is known for offering free credit and background checks to landlords and tenants and partnering with tenants to build credit by paying their rent — announced it closed $7.5 million in seed funding. This round of funding was led by Bill Trenchard of First Round Capital, Chad Byers of Susa Venture, Flexport.com CEO Ryan Petersen, Joe Montana’s Liquid 2, Village Global, Assurant Insurance, and Third Prime.
Along with the funding, Naborly also announced the U.S. and Canada-wide launch of NaborlyShield — which is a digital service that guarantees rental income and lease terms for landlords and tenants. And NaborlyShield eliminates the need for landlords to collect a security deposit or require a co-signer as it protects against unforeseen events like rent default, early vacancy, late rent, and property damage. This alleviates the cost and frequency of evictions.
RedFin estimates that there are more than 2.2 million evictions in the U.S. each year. And conservative estimates place the annual total cost of damages and lost revenue between $25 and $35 billion in the U.S. alone.
“It’s incredibly expensive to be poor in America. The least privileged people pay the highest interest rates and service fees while offered the fewest options. Not because they don’t repay their debts, but because they do,” said Naborly CEO and founder Dylan Lenz. “Research shows the average person in this country is one missed week of work away from a financial emergency. If their kid gets sick or their car breaks down, they get pushed into a financial crisis that costs a lot more than the few hundred dollars they need to get by. Meanwhile, they are paying thousands each year in interest and fees to predatory lenders and financial service providers, which perpetuates the systemic cycle of being broke.”
Naborly’s economic researchers and actuarial team studied eviction data and rental application trends for three years prior to launching NaborlyShield, according to Naborly spokesperson and BAM Communications account manager Brenda Manea. And they found that the majority of evictions could be eliminated or mitigated if tenants had better financial services available to them in the event of an emergency. With Naborly’s data and underwriting advantages, the average NaborlyShield protection contract costs just 2% to 5% of the annual rent thus making NaborlyShield 50% to 75% less (on average) from similar products in the market.
“This problem is a symptom of our financial system. We realized we needed to build a solution from the ground up, so we took a three-pronged approach,” Lenz added. “First, we rebuild the credit bureau system with free and fair credit that helps tenants build credit by paying their rent. Second, is an insurance-like product where we co-sign or guarantee leases so that all tenants can access sustainable housing. And finally, we extend a low-interest line of credit in those worst-case scenarios to help tenants avoid eviction before they occur.”
Naborly graduated from the Y Combinator (YC) startup accelerator program last year. At YC, the company made a drastic move of shutting down its existing revenue model and pivoted away from the tenant screening industry’s standard business model of paying per report or background check. And Naborly opted for a 100% free model for both landlords and tenants in order to help stop housing discrimination and to accelerate their viral growth. Plus the team skipped the YC Demo Day in order to focus on continued product development, expanding its services nationwide, and optimize customer acquisition before making its aggressive strategic approach widely public.
“Naborly is reimagining the relationship between landlords and tenants by leveraging the power of technology and data. We see a world where Naborly is the glue for the rental industry, improving the lives of tenants, while providing landlords better data and financial security,” explained Byers. “We are thrilled to be working with Dylan and his team at Naborly to build a next-generation financial services firm focused on the rental industry.”
Since launching, Naborly grew exponentially to more than 850,000 rentals in just 18 months, which makes it one of the fastest-growing property tech (PropTech) companies in existence