If you've tried to find a contractor for a home improvement project lately, you've probably noticed it isn't easy. We've heard that some contractors have waiting lists that stretch into months, and finding a great contractor is harder than ever. The demand for home renovations and repairs spiked during the COVID-19 pandemic and has continued in recent months.
It's no surprise then that home improvement and repair platforms are becoming more popular. And where there is interest, there is often venture capital. Lessen, a marketplace platform that helps property owners and service providers meet, raised $35 million in a Series A funding round.
What Lessen does
While there are multiple platforms for home renovations, Lessen is specifically designed for real estate investors with multiple properties. Its technology is designed to also serve as a one-stop platform for managing projects across multiple portfolios. Lessen doesn't just connect owners with contractors; it also provides access for property cleaning and laundry for both single-family and multifamily properties.
Lessen hasn't released its client list, but it's said to be working with institutional investors of large portfolios including a few housing real estate investment trusts (REITs). Lessen CEO Jay McKee has a deep background in single-family rentals. He founded Colony American Homes, a company that later merged with Starwood Waypoint Homes, which eventually became part of Invitation Homes, now the largest publicly traded single-family rental operator.
The other side of Lessen is attracting service providers such as plumbers, electricians, house cleaners, contractors, and others to join the site. The value proposition for pros is that they'll get access to tools for billing, project management, client communication, and scheduling. Lessen currently has 1,000 service providers across 26 markets.
Backed by seasoned real estate venture capital
Behind the round was an increasingly familiar name in real estate venture capital, Fifth Wall. The venture capital firm has been making major investments in real estate and amassing plenty of spending power along the way through its three SPACs and strategic investments in companies such as the Knock CRM and self-storage start-up Neighbor. Dan Wenhold of Fifth Wall will become part of Lessen's board of directors.
Previous seed-round funders Khosla Ventures, General Catalyst, and Navitas Capital also participated in the company's Series A. Khosla has invested in companies such as Veev, which builds modular homes, and Avvir, a construction technology start-up. Navitas counts Cherre and HqO among its real estate bets. Lessen has raised $44 million in total.
What's next for Lessen?
Given the massive growth in single-family rentals, Lessen has a large potential audience.
"The pandemic has supercharged growth in the single-family rental market, with no sign of slowing down, yet landlords lack the technology needed to effectively manage maintenance across their portfolios at scale," said Wenhold in a press release.
David Weiden, managing director at Khosla Ventures, compared Lessen's marketplace to some of its other top-tier investments, DoorDash and Stripe. Lessen will use the funds from the round to achieve scale by iterating on its platform and growing field operations teams. In his post on Medium, Wenhold shared that the multifamily and short-term rental markets are potential areas of expansion.
While Lessen remains privately held for now, it's one to keep an eye on because today's well-funded company is often tomorrow's hot new investable stock. If Lessen can continue to expand and become indispensable for property owners, it could have a bright future ahead.