Two years ago, the apartment search market was Craigslist, the company everyone loves to hate, and not much else worth getting excited about. Today, things couldn’t be more different, and the clear leader among the new market entrants is Apartment List.
The company, which celebrated its second birthday in September, now has the largest inventory among all competitors in 72 of the largest 100 markets in the US – up from 60 just two months ago – according to its co-founder CEO John Kobs, and has more than 1.6 million monthly visitors – a number that has grown threefold in the last 12 months. Kobs built Apartment List to 57 employees and completed its first acquisition this October (an all stock deal) without ever raising a dollar of venture capital. It raised a $1 million angel round in 2011, and has been profitable for its almost its entire existence, with revenue topping $10 million last year.
Things are changing in a big way today, as the company announced a $15 million Series A round led by Matrix partners. Jared Fliesler and Dana Stalder, both general partners at Matrix, will join the company’s board of directors in conjunction with the deal. The size of this round speaks both to the caliber of the business that Kobs has built to date and to the magnitude of the opportunity at hand. Kobs hinted that this round is likely to grow in size in the coming weeks with additional strategic backers in final negotiations.
“The online and mobile rental market is broken,” Kobs says. “We were happy to bootstrap our way to this point and keep control of our own destiny. We had the luxury of being picky in choosing who to work with. But we continue to see new opportunities – like our RentAdvisor acquisition – that demand more resources.”
The number one goal from this point forward, according to the CEO, is really to up ApartmentList’s market leadership in terms of inventory coverage. Like Kayak.com does in travel, Apartment List sources its inventory from several hundred data sources, including Rent.com and ForRent.com. But one thing it has never done is scrape Craigslist, something that has gotten competitors like Padmapper in legal hot water. Today, the company offers more than 600,000 rental apartment listings.
Mobile has been a big focus for Apartment List, which currently sees 47 percent of all of its monthly traffic coming from mobile devices. The company launched its a fully redesigned iOS app last month that has already seen over 150,000 downloads – a similar Android update is planned for Q1. With the average apartment search lasting just 28 days, it’s crucial to interact with users frequently over this finite time period, and Kobs says that mobile allows the company to do just that. Mobile users have been more loyal and 500 percent more engaged.
The company also introduced a roommate search app, called, appropriately, Roommates, that follows a Tinder-like model of browse and connecting with nearby “housing singles” with have common friends, interests, budgets, and neighborhood preferences. The app is live in San Francisco, Los Angeles, New York, Boston, and Chicago, with more cities planned to launch in the coming months.
Continued mobile development, including adding dedicated tablet apps, is a major priority, according to Kobs. This latest funding round will Apartment List to continue growing its team and to accelerate its progress on its development roadmap.
“Long term, want to tie this market together from end to end, meaning not just offering discovery, but also solving the transaction problem,” Kobs says. “This means eventually supporting lease signing and payment processing. We think that we can provide value to both landlords, who want to fill their vacancies, and to renters, who want to find housing.”
It’s not just Matrix that has taken notice of the company’s growth. Kobs is currently attending Goldman Sach’s exclusive, private internet company conference in Las Vegas, an event reserved for the top 50 companies that the investment bank is targeting as future IPO and M&A clients.
Rentals is a big, complicated market that no one company has been able to tame up until this point. Craigslist has long been the market leader, but that’s largely due to the site’s overall ubiquity, rather than because it offered a compelling user experience. Also, Zillow, Redfin, and Trulia are all starting to invest heavily into this space, including through acquisitions, meaning that there is little time to waste in terms of claiming market share.
Apartment List has stormed into the conversation well-designed product design and some intelligent business development. The company’s biggest advantage, according to Kobs, is its laser focus on the rentals market, unlike the above competitors whose focus is divided amongst real estate listings and general-purpose classifieds.
Judging by the company’s growth figures, the market appears to be responding. Now, Kobs and his team are poised to pour gasoline on the already-rumbling fire.