Cozy, a US-based app designed to simplify interactions between renters and property managers, closed an $8.5 million Series B funding round led by American Family Ventures, according to TechCrunch.
The platform, which is targeted at landlords that manage a relatively low number of units, makes it easier for consumers and managers to interact by offering a variety of functions, including apartment hunting and recurring rent payments. Since launch in 2012, the platform has served 75,000 landlords managing over 100,000 properties.
Cozy’s quick success illustrates the opportunity for potential entrants to the rental payments market.
- Cozy is processing $500 million a year in rent payments, with lots of room for growth. In 2015, US rental households spent $535 billion on rent, a 3.7% increase from the previous year, according to Zillow. That means that Cozy controls just under 0.1% of a growing market. And since the smaller landlords it targets comprise 75% of US property managers, there’s still considerable room for the platform to grow its volume and expand in the future. But Cozy’s quick ramp-up makes ongoing growth promising for the startup.
- That’s demonstrative of the potential in the space. Rent payments are large — median gross monthly rent in the US was $934 in 2014. And it’s likely that firms collecting digital rent payments, like Cozy, as well as the processors that serve them, are collecting percentage-based fee revenue on those transactions. And the firm is also creating revenue streams from value-added services, like faster ACH, for which Cozy charges landlords an additional $2.99 per unit per month. In the future, the fee revenue that both providers and payment services firms stand to gain from high-value payments combined with additional revenue from value-added services could leave early movers in the space with a substantial opportunity.
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