Jetty, a fintech company which aims to give renters flexibility when paying rent, has raised $23 million in a funding round co-led by Citi and Flourish Ventures.
The financing brings Jetty’s total raised since its 2016 inception to $78 million. Other investors participating in the latest growth round include Credit Ease and K5. Previous backers include Farmers Insurance Group, Khosla and Ribbit Capital, among others.
The 100-person New York City-based startup has come up with a way to help renters make rent on time with an offering that resembles the ‘buy now, pay later’ (BNPL) model that is increasingly used by consumers at the point of sale, online and in person.
In a nutshell, renters can pay their rent when it’s due and then have up until the 24th of the month to pay the money back to Jetty — either in a lump sum or via installments. They don’t pay interest charges or late fees, but rather a monthly subscription fee ranging from $15 to $25, depending on the renter’s risk profile. If the renter fails to pay back the money during the agreed upon time, they will not be able to borrow more for the following month.
The monthly fee is “far lower” than any potential late fee if the rent is not paid on time, said co-founder and CEO Mike Rudoy.
“Around 50% of the average renter’s paycheck is going to rent. So this is the largest expense of any renter, on a given month,” he said. “And so you would expect that there would be some type of financial services product that would give them the flexibility that they need to come up with the money on time in such a way that they weren’t penalized.”
The offering is more of a cousin to traditional BNPL, he said, than actual BNPL.
“We will pay the rent on behalf of the renter in full on the first of the month, giving property managers the money they need when they need it,” Rudoy explained. “Renters get 24 days to pay it back on a schedule that suits their needs.”
To launch Jetty Rent, the company partnered with Cortland, a large real estate investment, development and management company, to roll out the offering in beta to residents across a portfolio of properties.
Now, the startup is launching the offering to the public. Jetty Rent is the newest product on the startup’s platform, which also offers “low cost” renters insurance as well as security deposit replacement.
“The mission of the company is to make renting more affordable and flexible,” Rudoy said. “And we are a financial services platform whereby every product that we have launched is meant to both provide value to both property managers as well as renters.”
With the move, Jetty is evolving from being an insurtech to also a lender, said Rudoy. The company is providing the loans through Cross River Bank.
“We are working to bring some additional credit and lending prowess to the business given the fact it has historically been considered an insurtech company,” he told TechCrunch.
The fact that the company offers all three products to property managers gives it a competitive edge, according to Rudoy.
“This makes us different from other financial services companies attacking the same space and problem set,” he told TechCrunch. “We’re the only one that has both a security deposit alternative and flexible rent product under the same roof. It makes the choice to work with us much easier if you’re a property manager, from an integration and onboarding perspective. It means fewer different brands in front of renters as well.”
The renters pay for all the products and the property managers are partners in the distribution of the products.
Currently, the company has agreements with property owners and managers that operate more than 2.2 million rental units across the country. Since starting to build its property partner network in 2017, Jetty has seen 193% average year over growth in contracted units, according to Alex Vlasto, the company’s VP of marketing. Besides Cortland, it also works with AMLI Residential, for example.
Emmalyn Shaw, managing partner of Flourish Ventures, notes that over 70% of Americans live paycheck to paycheck.
“Stable housing is a critical component in helping them achieve financial security,” she said.
Jetty, Shaw added, is the only company “that extends beyond a single solution to embed a rich and differentiated set of financial offerings” including rental insurance, security deposit alternatives and now rent flexibility.
“Through its unique consumer insights, differentiated pricing, increased consumer loyalty, Jetty has achieved a significant competitive advantage,” she wrote via email. “Moreover, their consumer reach through top property management entities like Cortland is unparalleled.”
As of late, other startups that have come up with new technology to make the lives of renters easier have also raised money. Sugar, a startup that aims to turn apartment buildings into “interactive communities,” recently closed on $2.5 million in seed funding. And, RentCheck, a startup that has built out an automated property inspection platform, recently raised $2.6 million in seed money.