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The London-based tech startup Lavanda enables institutional real-estate companies and landlords to profit legitimately from Airbnb-style homestays and home sharing. The company has now secured €4.5 million in Series-A round, which was led by Henley Ventures. With fresh funding, the company aims to accelerate its growth in the UK and expand its operations globally, specifically into the US and the Middle East.
What’s interesting about Lavanda is that it started out as a laundry sharing-economy company and later evolved into a tech based startup for handling a completely different sector. We had an opportunity to talk more about the startup with its founder, Guy Westlake, and find out more about the company, how it came to be and where it is headed.
Evolution of a business
As mentioned above, Lavanda started out as an on-demand laundry business. This was when Westlake put together his experience in on-demand logistics at the company Shutl, and his wife’s experience as a Global Brand Manager at Unilever managing a portfolio of the company’s laundry products. However, in the first few months, the company realised that most of their business was driven by Airbnb hosts and short-term rental operators. Westlake then started offering additional services to such users and in the process soon gained some insights.
“Whilst many of these businesses were growing fast, much of their growth was illegitimate: a significant percentage of landlords were renting out property on a commercial basis, flouting local regulations, and more than 50% of properties were being illegitimately sublet on Airbnb by long-term tenants (i.e. without landlord consent),” reveals Westlake. As a result, management companies were facing difficulties in quality control and consistency of their hospitality operations as they tried to scale.
Westlake soon realised the potential in this market. Airbnb-style home sharing could be made even better by enabling property owners and residents the ability to flexibly monetise slack capacity or void periods in real estate assets. The company then soon shut down its laundry business and came up with the Lavanda we know now.
How Lavanda works
By being able to observe legal short and medium term rental demand, Lavanda enables landlords to manage and optimise the performance of their residential portfolios to monetise void periods. The startup has a number of solutions and programmes that takes into account the nature of the building, where it is in its lifecycle, the terms of the lease, and relevant local regulation. The company also partners with landlords during the lease-up phase of a newly developed building to optimise net operating income (NOI), and then evolve to fill voids between long-term residents alongside a number of other value-added, building-specific solutions.
Enabling ‘Generation rent’
In this day and age, most millennials seem to prefer renting over buying and this is why there are probably hosts of services that rent out amenities. Lavanda banks on this approach and offers a new service to institutional real-estate companies and landlords. With the startup’s services, they can enable “Pay as you go” for the fast paced generation.
“Imagine a world where you rent an apartment, your home, in perpetuity; it is your home whenever you need it, but you have the additional flexibility of being able to sublet it securely and effortlessly whenever you wish to spend time elsewhere – be it for a weekend, or for 3 months plus,” says Westlake.
Competitors and challenges
Real-estate leasing is a fragmented sector where there are apparently next to no competitors for Lavanda. While the company’s services as a whole might not face any competition right now, there are some of its services that “compete with alternative plays in those specific vertical markets.” However, the company says that where it does compete directly, it differentiates itself by offering their partners the option to legally grow and configure the company’s toolkit to meet their specific requirements.
As for some key challenges in this field, Lavanda says that it has to work ten times harder to help their customers see past the negative perception they have of the sector. This is because “Airbnbing”, and homestays have been portrayed to have a bad reputation in the media. When it comes to defining success, Lavanda measures it in the number of units that are being offered through its platform, which are currently more than 10,000.
Image credits: Lavanda
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