NestEgg, a fintech helping independent real estate investors create wealth by streamlining property management processes, on Nov. 18 formally announced the closure of a $7 million Series A round led by Hyde Park Venture Partners with participation by Bonfire Ventures and BAM Ventures.
For independent real estate investors, the barriers to success are high.
That’s according to Fletcher, a technology and software veteran that spent an entire career making it easier for people to navigate and enjoy life using the web. During Fletcher’s tenure at Expedia and Hotwire, he and his wife were landlords that found it often time-consuming and frustrating to manage a portfolio of rental properties.
“There were definitely a lot of month-to-month cash flow challenges,” he said. "We tried every other app out there and we just couldn’t find anything that we felt solved the problem in a meaningful way.”
That’s when in 2017, alongside a couple of his colleagues at Expedia, Fletcher co-founded NestEgg as a wealth creation platform for real estate investors. With a goal of creating a million millionaires in five years, NestEgg helps over 12 million mom and pop landlords accelerate their progress towards financial independence.
“These landlords are typically looking to build portfolios of twenty, thirty, and forty units,” Fletcher said in a discussion over real estate investing’s financially demanding characteristics. “They get bogged down on that journey somewhere in the range of one to ten because it’s super time consuming managing properties.”
Core Product Portfolio
In the simplest way, NestEgg’s solution provides independent small- and multi-family rental investors the technology to automate, reducing the time it takes to complete property management tasks to minutes a month.
“A lot of customers typically go from spending a couple weekends and nights a month to just minutes, even with reasonably big portfolios,” the CEO noted.
Additionally, NestEgg offers a set of financial services, including cash flow management and brokerage functions.
“Our platform flattens out the end-of-month cash flow issues,” Fletcher noted in a discussion of NestEgg Pay, a secure landlord-tenant system that guarantees rent on the 1st of every month, and allows landlords to spread the costs of expense items for free, with no credit inquiries. “For a landlord, this means retention. If you have someone who doesn’t renew a lease, it’s probably one of your biggest expenses right there.”
“The other element we offer is something new that we’re bringing in -- a brokerage function.”
With the brokerage functionality, NestEgg uses data on existing landlord portfolios to find the next best deal and then help with financing through its banking partners.
“We shortcut what it takes for investors to find that next unit, bring it on, get it managed, get it occupied, maintain them, and get income flowing," he said. "We provide this full stack solution that helps you go from being able to grow your portfolio by one unit every two years, to five units a year.”
In light of the COVID-19 coronavirus pandemic, NestEgg saw increased use by users looking to streamline the landlord-tenant relationship.
“It has really been a tailwind for us,” Fletcher said. “We’ve been growing more than 30% month-over-month, every month, since September 2019.”
NestEgg’s growth caught the attention of notable investors, like Hyde Park partner Ira Weiss which saw the firm’s offer as a solution for a market of twelve million underserved mom and pop landlords.
“There’s a lot of people who want to invest in your company because it’s a good deal,” Fletcher said in a statement on the Series A funding round that was led by Hyde Park Venture Partners, with participation from BAM Ventures, Bonfire Ventures, Financial Venture Studio, Dreamit Ventures, and Hyde Park Angels. “But really, you want to find someone who wants to invest in your company because they share your vision for the future.”
Weiss saw NestEgg as a really great technology that could provide strong financial services to the mom and pop landlords that own 74% of the rental properties in the United States.
“We now have this complete group of investors who each bring a different expertise to the company. We have financial services expertise, fintech, proptech, and SaaS,” the CEO said in a discussion of Weiss’ decision to join NestEgg’s board.
NestEgg is filling a gap, allowing landlords improved odds of success in financial independence through real estate.
“We’re taking away the things that make it harder for them to leverage up more," said Fletcher. "By having a stronger personal profit and loss, which is what you get by using NestEgg, that makes you far more confident and gives you access to better credit and more lending, so you can grow faster.”
Going forward, NestEgg plans to further improve its library of tools and services for rent collection, cash flow management, and maintenance coordination, by growing its team.
“We’re hiring another forty people over the next three months, almost all of them in technology,” Fletcher said. “We’re going to continue to build products and bring more services, and integrate them more tightly, to make the journey easier for mom and pop landlords.”
To learn more about NestEgg, click here.