Mashroom, the London proptech that offers an “end-to-end” lettings and property management service, has raised £4 million in new funding.
Backing comes from existing unnamed private investors and matched funding from the U.K. taxpayer-funded Future Fund. It brings total funding to date for the company to £7 million.
Pitching itself as going “beyond the tenant-finding service” to include the entire rental journey — from property advertising, arranging viewings, credit history checks, maintenance, to end of tenancy and dispute resolution — the self-service platform lets landlords list their property, which tenants can then rent easily.
This includes digital credit and reference checks and the signing of rental agreements and tenancy renewals. In addition, open banking is employed to collect rental payments and provide real-time payment information to landlords.
“Letting and renting is, for the most part, still a fragmented, bricks-and-mortar industry,” says Mashroom founder and ex-venture capitalist Stepan Dobrovolskiy. “The experience as a landlord or tenant normally still involves a traditional estate agent who acts as intermediary and charges a hefty fee. While plenty of new players have come along with tech to solve certain points in the experience, we are the first to look at the entire process from end to end”.
Dobrovolskiy says this sees Mashroom digitise about “98%” of the rental journey, although he maintains that some human interaction is, and perhaps always will be, necessary. “Unlike most traditional agents, we are also still there to help after tenants move in –- things like maintenance requests, insuring contents, moving out or extending contracts at the end of the tenancy. We fundamentally believe that automation and tech should augment rather than replace human interactions in this market, and a big part of our brand is to create better relationships between landlords and tenants,” he says.
As an example, Mashroom incentivises tenants to help landlords with viewings at the end of their tenancy by offering a week’s worth of rent as a reward. “No one knows a property better than people who actually live in it, and it removes a lot of friction to have current tenants schedule and host viewings at times that suit them,” explains Dobrovolskiy. “This costs less than 2% of annual rent for landlords, compared to paying 10%+ to an estate agent for finding a new tenant. So we are unlocking financial benefits for landlords and tenants at the same time as giving them more flexibility”.
Mashroom has also developed a “Deposit Replacement Product” as an alternative to the traditional deposit. In partnership with insurer Arch Capital, it lets tenants pay one week’s rent while offering landlords more protection than a regular deposit -– up to 12 weeks compared to the typical 5 weeks.
Noteworthy, the basic Mashroom service is free for tenants and landlords, with the proptech startup generating revenue via its financial products offering which, along with deposit replacement, includes rent guarantee and other insurance products. The startup also operates its own in-house mortgage brokerage for buy-to-let mortgages and refinancing for landlords.