Zibo, a banking and payment platform for independent landlords, announced today that it has raised $10.5 million in seed funding to help scale its one-stop-shop approach to financial management for residential rental properties.
“It’s a pretty large round and we’ve got some of the best venture capital partners out there,” Chris Hsu, cofounder and CEO of the Redwood City, California-based startup, says.
Led by Canaan Partners, which has backed up a number of rising real estate tech firms, Zibo’s funding round also drew in capital from QED Investors, SVB Capital and Khosla Ventures.
Hsu, a former chief operating officer at Hewlett Packard Enterprise HPE , says Zibo, which is free of charge for landlords’ use, will pour the $10.5 million toward building out its platform that allows landlords to receive rent, manage cash flows and streamline loan and insurance applications.
In the last couple of months, functioning in a private beta mode, Zibo has facilitated the collection of $250,000 in rent payments for “a handful” of landlords, Hsu says. A portion of the seed funds will underwrite the expansion of Zibo’s consumer base through education and outreach, he adds.
Nationally, there are about 11 million independent landlords, who collectively own about a half of all rental units in the country, but only roughly 3 million of them rely on any kind of software for their finances, says Hsu. Unlike their institutional peers, a lot of mom-and-pop landlords lack the monetary bandwidth to invest in financial and property management tools.
“If you talk to these independent landlords, what they can tell you is that they spend an inordinate amount of time just staying organized,” Hsu says. “By the nature of having multiple properties in a portfolio, they have multiple bank accounts, different security deposit accounts for each building or unit or tenant. Then they have operating accounts that are tied to where they got a mortgage from.”
Most of the existing companies that cater to small-scale landlords address only certain aspects of running a rental business. Zibo, on the other hand, offers a broad suite of functions. Through both proprietary algorithms and technology providers, Zibo unifies landlords’ financial records, allowing them to securely link various bank accounts and transfer funds. The platform also retains information to expedite the filling out of loan and insurance applications and to help prepare tax documents.
“[Zibo’s] simple, streamlined technology platform enables rental property owners to better manage their finances and automate processes that should have been automated a long time ago,” Rich Boyle, general partner at Canaan Partners, said in a press statement.
A proptech solution to a personal problem
For Hsu, Zibo is the platform he wished for as a landlord. Some two decades ago, after departing from the U.S. Army, he entered the residential rental market to build family wealth together with his wife.
“We’ve experienced every pain point that exists, including trying to build my own tooling in Excel to better manage these properties so that they takes a lot less time from a financial perspective,” Hsu says.
After a career in the technology sector, Hsu began to frame his idea for Zibo as a platform for the “underserved landlord” in late 2018 when he partnered with the company’s two other cofounders, chairman Greg Watson (cofounder of Roofstock, an investment property firm) and Rob Bloemker (who cofounded Dwell Finance, a lender for single-family rental property investors).
Today, Zibo has 34 employees. With real estate technology, or proptech, rapidly gaining ground, the online disruption Hsu hopes his company to blaze is only in its nascence.
“[We are in] the very beginning of a massive multi-year migration of old-school offline approaches, record keeping, payments, interacting with tenants and contractors, to a digital world,” Hsu says. “Zibo is in the heart of that.”