Obligo: Reviving the Landlord and Renter Relationship
A platform that relieves both landlords and renters of the security deposit burden
Renting can be an excellent option for those who want to avoid the price tag or permanency of homeownership. As of 2019, renters made up about 36% of the nation’s 122.8 million households. However, while renting offers many benefits, there is still the financial burden of expensive security deposits.
Alumni Ventures portfolio company Obligo is helping build a better relationship between landlords and renters by offering an alternative to the traditional security deposit. Similar to a hotel room deposit, Obligo establishes connections with a tenant’s bank account and collects an annual fee in exchange for taking on the liability of securing any payments for damages. This technique allows renters to keep the money that would be used as a security deposit and enables landlords to avoid the hassle of collecting and managing that deposit.
Addressing an Important Market
Obligo’s business model is positioned to be scalable and lucrative. The company’s product allows renters and/or property managers to pay a small fee (6-13% annually) in replacement of the traditional lump sum security deposit. In return, Obligo takes on the liability of collecting the security deposit should the renter need to pay. In addition to this primary offering, Obligo also offers a screening and collection product for property managers.
Residential security deposits total over $40 billion in the U.S. alone, giving Obligo a significant market opportunity. Over time, Obligo also plans on expanding its products to include more collections and screening services, opening up new revenue streams. Following this, Obligo plans on expanding internationally (Europe, Asia, South America) to broaden its target market.
What We Like About Obligo
Experienced Board: Obligo’s Board is experienced in the B2B technology sector on operating and investing sides. 83North board member Yoram Snir is the lead partner on this deal and has extensive experience growing and exiting startups like IronSource and Webcollage. Other board members include Yahal Zilka, Michael Olshan, and Aviad Eyal, who all have over 20 years of investing experience and have been on the board of companies like Monday.com and Waze.
Strong Competitive Moats: Obligo holds some critical competitive advantages in the market. First, most available security deposit platforms are insurance products, whereas Obligo is a credit product. Second, Obligo has a machine-learning algorithm to quickly assess a renter’s risk of default. Lastly, Obligo has a 5x more effective collections technology than other insurance companies.
Significant Traction: Since launching in 2019, Obligo has gained considerable traction. The company has over 200K partner units, with 10K new active renters signing up per year. In addition, they have signed over 100 property managers to date, with nearly 130 more property managers in the pipeline.
How We Are Involved
Alumni Ventures’ Purple Arch Ventures (for the Northwestern community) and The Yard Ventures (for the Harvard community) deployed capital in Obligo’s $35 million Series B led by 83North. Other participating investors include HighSage Ventures, 10D, Entrée Capital, MUFG Innovation Partners, and La Maison Partners.
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