Toronto-based insurtech startup Padder has closed $2.5 million CAD in funding to support the launch of its “guarantor-as-a-service” platform for Ontario landlords and tenants.
Padder was founded in 2023 by CEO Daniel Moss, a former data product and business intelligence manager at Toronto’s Zensurance. The company aims to help landlords lease units to tenants with non-traditional financial profiles by assessing their risk and guaranteeing their rental payments. As Moss told BetaKit in an interview, “Padder effectively acts as your co-signer.”
Daniel Moss, Padder
“Padder effectively acts as your co-signer.”
With average rents falling and vacancy rates on the rise across Canada, Moss believes that Padder’s new guarantor product is “timed well” to fill some of those units by helping landlords tap with greater confidence into a broader pool of candidates: students, freelancers, gig workers, other self-employed individuals, new immigrants, and pensioners.
Padder’s equity seed round, which closed earlier this month, was led by North Exit Ventures, with support from Westdale Properties and angel investors from real estate, insurance, and finance. Moss did not share the company’s valuation. The startup plans to use this capital to grow its six-person team, invest in product development, and fuel its go-to-market efforts.
For tenants, renting an apartment in Toronto has always been challenging, especially if they do not possess a three-to-one monthly income to rent ratio, multiple pay stubs, an employment letter, and a 700-plus credit score. “It’s a pretty standard box across the industry, and it doesn’t represent what the modern renter actually looks like,” Moss said.
Padder’s underwriting models aim to assess renter risk “more holistically” by incorporating real-world income patterns and financial behaviour, taking into account more than 100 data points. Once a tenant is approved through the company’s platform, they are issued an insurance policy through Desjardins subsidiary ICPEI that covers their rent, should they default.
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Moss said Padder Guarantor charges tenants a one-time fee of between five and 10 percent of their total annual rental costs for the service.
While fellow Toronto firm SingleKey also offers a tenant guarantor service, Moss said that this guarantor-as-a-service model has taken deeper roots in the United Kingdom and the United States than Canada because demand has long outpaced supply north of the border.
“We have always had more people than available rental units, so vacancy has always been sub-two percent,” Moss said.
But lately, that equation has flipped. “With the tapering of immigration, as well as the influx of condo deliveries that happened over the last 18 months, we’ve seen an inventory spike, so landlords who have never had to deal with vacancy spikes [or] turnover spikes [are] offering more concessions,” Moss said. He believes Padder can be part of the answer to this problem.
Feature image courtesy Unsplash. Photo by Jakub Żerdzicki.