(Bloomberg)—Blueground, a startup focused on short-term furnished apartment rentals, raised $140 million in equity funding from investors led by Laurence Tosi’s WestCap Group, an existing backer.
Geolo Capital, an investment arm of billionaire John Pritzker’s family office, also participated, as did VentureFriends and Prime Ventures, Blueground Chief Executive Officer Alex Chatzieleftheriou said in an interview. Blueground is now valued at $750 million, according to people with knowledge of the matter. The New York-based company separately obtained a $40 million debt facility from Silicon Valley Bank.
Funding will be used to fuel Blueground’s expansion from an existing presence of over 5,000 apartments in 15 cities across the globe including Los Angeles, Seattle and Istanbul, Chatzieleftheriou said. The company plans to launch in Miami, Madrid, Zurich and Berlin by year-end and is targeting being operational in 50 cities by 2025.
“Blueground is uniquely positioned to address the growing need for flexibility in real estate as companies continue to delay return-to-office mandates,” Pritzker, Geolo Capital’s founding partner, said in an emailed statement. “There’s an immense opportunity here.” Tom Gottlieb, co-founder and managing general partner of Geolo Capital, will join the Blueground board.
Chatzieleftheriou co-founded Blueground in 2013 in Athens, after enduring months-long hotel stays for various work assignments in his prior career as a McKinsey & Co. consultant and realizing furnished apartments for short durations were difficult to find.
At the onset of the pandemic in 2020, occupancy dropped to 88% in some cities before stabilizing at 92%. Blueground had lowered its rates amid dramatic rental declines in cities such as New York and San Francisco. Its residents, mostly single professionals or couples aged 25 to 45, remain hesitant to sign 12-month leases due to uncertainty, a theme that has persisted in 2021.
The minimum length of a Blueground stay is one month and the average rental spans 4.5 months, said Chatzieleftheriou, who has lived in Blueground residences for the past five years, mostly in three- to six-month stints. Around 60% of bookings are repeat customers either extending stays, moving to a new neighborhood within the same city or a different city.
The startup has been bolstered by the ongoing adoption of remote working, Chatzieleftheriou said.
“More companies are giving employees the ability to choose where they want to live and work, and we believe that trend is here to stay,” he said. Blueground itself allows staff to be nomadic.
The company counts Related Companies, AvalonBay Communities Inc. and Equity Residential among landlords with which it either inks traditional leases or revenue-sharing agreements. It expects revenue to grow 40% in the 12 months through December to $140 million, and is projecting 85% revenue growth in calendar 2022 to around $260 million, Chatzieleftheriou said.
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