goodwater capital

Long term room-rental platform Badi launches its service in NYC

As things stand in many countries, renting houses and whole apartments is relatively straightforward, if you can afford it. But trying to find rooms in those apartments and houses to rent has been chaotic for many years and relies on hugely informal networks. Some startups have launched in recent years to address this problem of finding roommates and rooms for rent as the market becomes more competitive.

Roomi (NYC, raised $17M), Roomster is in NYC, and then there’s SpareRoom. All have appeared to try and capture this growing market. And of course, they have Craigslist and Facebook Marketplace as competitors. 

Then there are other co-living companies include Common, Ollie, Quarters, Startcity, X Social Communities, and WeLive.

Backed by $45 million from U.S. and international investors like Spark Capital and Mangrove Capital, including $30 million from Goodwater Capital as their first investment in a Spanish startup, Badi is a Spanish-born startup (founded in Barcelona by Carlos Pierre) which is a long-term room rental platform, operating in cities like London, Barcelona, Madrid, Berlin.

It’s now launching in New York City, after claiming to have surpassed more than two million users in Europe. Badi says its web and mobile app now features over 300,000 listings. After soft-launching in November of last year, it claims to be growing booking requests by 370%. 

Pierre says: “Every major city around the world is suffering from overcrowdedness and increasing rent prices. The strong interest from the participants in our beta group alongside the findings from our 2020 survey on NYC indicates that city dwellers are warming up to the idea of sharing and co-living arrangements.”

During its beta in NYC, Badi found that the majority think co-living is a growing trend and shared living spaces with shared resources are viewed favorably.

Badi’s main pitch is that it provides a safe and secure communications channel for users to get to know potential roommates without an intermediary, using a visual verification tool for ensuring renters profiles and photos of the rooms and amenities.

It’s serving a need. The United Nations projects that 2.5 billion people will live in cities by 2050. This will cause rents to skyrocket, of course.

Wedding dress customizer Anomalie raises $13M as bridal stores crumble

David’s Bridal once owned 50% of the $36 billion wedding gown market before it filed for bankruptcy last year. Brides were growing sick of the lack of styles and sizes plus high prices at expensive brick & mortar shops. The industry was destined for disruption by software that would replace overhead costs and inflexibility with direct-to-consumer personalization.

That’s why I profiled a new custom wedding dress startup back in 2016 called Anomalie despite little funding or traction. The rise of Instagram meant every bride wanted to look unique on a budget, not pay $5000 for a cookie-cutter $200 dress that happened to be white. Anomalie was willing to embrace software to offer 4 billion design permutations and break the markup cartel by selling gowns starting at $1000.

2.5 years later, Anomalie has begun to prove that cheaper doesn’t have to look cheap and custom doesn’t have to cause a headache. 13% of US brides, 275,000 out of 2.1 million, created an Anomalie account in the last year. With David’s Bridal looking shaky and wedding dresses being a seven-times larger market than bedding and mattresses, investors eagerly proposed to Anomalie. Today the startup announces a $13.6 million Series A led by consumer product VC Goodwater Capital .

“I don’t think I’ll ever get tired of working with brides. Other companies would kill for this costumer. She’s so obsessed with every detail of her wedding dress. it’s just a perfect environment to collect data” says Anomalie co-founder and CEO Leslie Voorhees. “Long lead time, high margin, this industry that’s completely f*cked up —  it’s the perfect place to start this mass customization engine beginning with the wedding dress” she tells me, hinting at the startup’s potential to customize other clothing too.

Anomalie is also flexing its tech muscle today with the launch of its new dress sketch visualizer. Choose between a few options on shape, cut, color, pattern, and fabric, and you’ll see an algorithmic sketch of your dream dress appear instantly. Anomalie then pairs you with a squad of its designers to finalize the details, ship swatches, and get you your gown with a 100% refund policy if it’s not right.

The startup’s nest egg will go towards hiring more engineers plus bringing more of production in-house to offer additional features like this. But Voorhees insists that “I don’t think we’ll ever completely automate away the stylists. Customer don’t care about AI or machine learning, but they want to trust us to pull the ideas out of their heads.”

Anomalie co-founder and CEO Leslie Voorhees

Anomalie was woven out of Voorhees’ frustrations picking her own wedding dress. She’d been managing factories and supply chains in Asia for Nike and Apple, and it made no sense why slapping “bridal” on a dress could make it up to ten-times more expensive.

Her investigation uncovered that most brands were outsourcing their manufacturing, so she did an end-run, contacted factories directly, and got her dress made custom for a fraction of the price. So many of her pals demanded help doing the same that the Harvard Business School grad soft-launched Anomalie with her husband Calley Means [Disclosure: who I know from college] in the summer of 2016.

The startup’s gowns now average $1,400. Growth has been swift since weddings are so photographed and shared, with Anomalie reaching an outstanding net promoter score of 91. A friend of mine recently bought her dess through the company and it looked stunning and one-of-a-kind without breaking the bank. And since they’re custom, Anomalie makes inclusivity and advantage by offering larger sizes absent elsewhere

Meanwhile, Anomalie’s incumbent competitors have struggled. Gap and J.Crew abandoned the wedding dress business in the last few years. David’s Bridal emerged from bankruptcy with its 300 retail stores still operating, but it’s slipped to 30 percent US market share. It’s now owned by lenders including Oaktree Capital Group, which is a bad omen given that firm was responsible for driving Toys”R”Us into liquidation instead of keeping it open. No other players have a sizable foot or well-known brand besides super high-end designer Vera Wang.

Anomalie capitalized on David’s troubles by poaching its head of bridal production Angela Ng, who now leads the startup’s Hong Kong team and relieves Voorhees of constant trips to China. It also hired former Sephora VP of digital Marcy Zelmar and former TrueCar VP of engineering Aaron Tavistock. Their goal is to sell more dresses to get Anomalie more data, more factory modularization, and more control over its manufacturing.

Anomalie’s dress visualizer turns a few style selections into a sketch of your potential gown

The new funding round that builds on its $4.5 million seed round was joined by Signia, SoGal Ventures, Lerer Hippeau’s BN Capital Fund, and Fin’s Sam Lessin also includes strategic angels like former Stitch Fix CTO Jeff Barrett and ThirdLove underwear CEO Heidi Zak. At Anomalie’s San Francisco headquarters, mannequins sporting design prototypes stand beside software teams optimizing the new dress visualizer. And when I say the dresses are custom, I mean they can get about as weird as you want. Anomalie is finishing up a dress with lyrics from the couple’s favorite song embroidered in a secret language from their favorite TV show…and it still looks beautiful.

“One of the coolest things about Anomalie is that they’re not just using digital as a distribution strategy, but to also deliver a differentiated product experience” says Goodwater partner Eric Kim. “Anomalie’s sketch-builder is a great expression of this emphasis on product and customer centricity.” Wedding dresses have been largely ignored by startups despite the market being bigger than luggage ($34 billion), or shaving ($21 billion), oral care ($10 billion) and hair loss ($4 billion) combined.

The challenge is that unlike those products, bridal gowns are “a zero failure game. This is like airplane engines and heart rate monitors” Voorhees stresses. Anomalie must maintain perfect quality, times, and customer experience to avoid ruining someone’s big day. “Never messing up a dress or losing a dress — we take this really, really seriously.” She knows a few viral disasters could sink the ship. It also has to stay ahead of fresh entrants like COUTURME, a new Y Combinator startup making custom evening gowns as well as wedding dresses.

Anomalie’s SF headquarters. Photo by Summer Wilson

Anomalie sees global demand for a better experience, and thinks it can apply its data set to wedding dresses for more cultures as well as additional types of clothing. “We are building up a large repository of female measurements and creating tech plus operational processes around ‘mass customization’ that can be applied to other garments” Voorhees reveals. “Our aspirations are around bringing more body inclusivity + customization to women’s fashion, not just bridal.”

And while Anomalie could always find a retail partner to get more exposure, it’s tough for brick & mortar brands to operate online without cannibalizing their sales. “We think the women’s closet of the future contains staples from Stitch Fix, rotating dresses from Rent the Runway, and signature custom garments from Anomalie.”

The Anomalie just needs to educate brides that they can actually have the dress of their dreams, and now it wants to inspire that dream on-site too. Full of ambition and verve, Voorhees concludes, “What’s Pinterest valued at when it’s basically a wedding dress search engine?”

ZeroDown is constructing a new path to home ownership

Even rich San Francisco residents can’t buy a home.

Sure, if your startup just went public, you might be amongst a small class of people able to put in all-cash offers over the asking price. But most people living in the Bay Area, even those with six-figure salaries, only aspire to become homeowners.

“Owning things is a pretty central idea to the American enterprise,” said Abhijeet Dwivedi, the co-founder and chief executive officer of ZeroDown, a new startup hoping to make home ownership in the Bay Area a reality for more people by combining the security of ownership with the flexibility of renting. “Anyone who has gotten rich in the last 240 years has done so by owning things.”

ZeroDown, as the name suggests, couples technology and a debt-fueled real estate fund to allow home-buyers to forgo the traditional down payment process required to purchase a home. The company, which charges a $10,000 fee per home, is a graduate of the Y Combinator startup accelerator’s winter cohort. Today, it’s announcing a $30 million round of capital from former YC president Sam Altman and consumer technology venture capital fund Goodwater Capital.

Earlier this year, ZeroDown had the VC community buzzing. At just a few months old, the San Francisco-based startup was already fielding offers from funds. Why? Because its founding team is made up of Dwivedi, the former chief operating officer of Zenefits; Laks Srini, Zenefits’ former chief technology officer; and Hari Viswanathan, a former Zenefits staff engineer.

Ultimately, the trio raised a bucket of capital at a valuation north of $70 million, sources confirm to TechCrunch, (the company declined to comment on its valuation). That’s quite the vote of confidence for a capital-intensive real estate business but the founders reputation preceded them and early backing from Altman, who invested before the company decided to enter YC, peaked the curiosity of early-stage VCs.

ZeroDown co-founder and chief executive officer Abhijeet Dwivedi.

Sam Altman was the first person we called to discuss the idea … and he wanted to back the team,” Dwivedi said, noting that Altman didn’t suggest the team go through YC, rather, a desire to feel like “beginners” again inspired their decision to complete the three-month program, which is more often made up of first-time founders.

Amidst all the buzz, ZeroDown skipped out on Demo Day in March, the culminating event of YC that gives startups a couple of minutes each to entice investors into supporting their big idea. ZeroDown didn’t need to make a showy pitch. Fundraising hadn’t been and wouldn’t become a difficult process.

TechCrunch noted all this in a story earlier this year highlighting how competitive investing in YC startups can be for venture capitalists. ZeroDown may have raised at the highest valuation for a startup fresh out of YC but it certainly wasn’t the only member of the winter cohort to raise significant capital before graduating from the accelerator. Catch, Overview.AI, Truora, MiddeskGlide and FlockJay, among others, had signed term sheets before the big day, for example.

Parker Conrad, the co-founder of Zenefits, similarly opted to go through YC with his latest startup, Rippling. Right off the bat, Rippling raised a $7.5 million seed round followed by a $45 million Series A.

Using ZeroDown

ZeroDown seems to be serving those who have an individual or combined salary of more than $200,000, stock options and some money put away — aka not exactly your average Joe.

Here’s how the service works:

  1. ZeroDown determines whether a potential customer qualifies, factoring in total annual income before taxes, stock grants, recurring monthly loan payments and credit.
  2. A customer picks a qualifying home, typically one priced between $550,000 and $1,750,000. ZeroDown purchases the home.
  3. The customer begins leasing the home from ZeroDown.
  4. The customer is given five years to pay ZeroDown the cost of the down payment.
  5. Every month throughout the five-year period, the customer earn purchase-credits — similar to earning stock options at a startup — that represent a percentage of their ZeroDown home’s value. If they live in the home for at least two years, they can put those credits toward purchasing the home or they can can move out after two years and redeem the purchase-credits for cash back.
  6. If a customer reaches the five-year mark and wants to stay put, they must purchase the home at that time.

The idea is to give people more flexibility and power in the home-buying process: “It gives people time to build up more savings or get a higher salary,” Dwivedi explains. “Their buying power five years out is hopefully higher than it is today.”

ZeroDown earns money from its $10,000 price tag and through a 24/7 concierge service it provides to customers. It’s partnered with Sheltr to connect ZeroDown users to services they might need as homeowners, including a babysitter or a plumber, for example.

“It’s meaningful to give people a place to call their homes,” -ZeroDown CEO Abhijeet Dwivedi.

Under the hood, ZeroDown has two businesses running simultaneously. One is a technology startup supported by the $30 million equity financing and 20 employees. The other is a real estate fund supported by a “decent sum” of debt capital (Dwivedi declined to disclose the precise amount). This unique business structure helps ZeroDown minimize risk, he said.

“The fund has to do its job to hold the assets and provide a return and the tech company has to do its job of executing very well,” Dwivedi said. “The templates to run both of these types of businesses exist independently in the market.”

Seperately, however, things get more complicated, which is why a solution like this hasn’t come out of Silicon Valley in the past.

ZeroDown is tapping into a particular pain point, one intensified in the Bay Area where 81% of homes cost more than $1 million, according to data compiled by Trulia .

For now, ZeroDown is focused on that market but in the long term, the team hopes they can expand to new geographies and assist a wider and more diverse population of potential homeowners.

“It’s meaningful to give people a place to call their homes, a place where their memories are founded, a place where they live,” Dwivedi said.