Toronto-based startup Chexy, which offers a rewards platform for renters, has secured $4.1 million CAD in seed funding.
The all-equity round closed in May, led by UK-based venture capital firm Venrex, with participation from returning investors Crossbeam Venture, GroundBreak Ventures, Antler Global, with strategic angels from the real estate, FinTech, and banking industries. The Firehood co-founder Claudette McGowan provided Chexy with $25,000 in May as a result of its participation in the second Women+ Entrepreneur Incubator program cohort.
Chexy co-founder and CEO Liza Akhvledziani told BetaKit that Sakib Jemal of Crossbeam will be joining Chexy’s board as a result of the round, with Ian Goldberg of Venrex gaining a board observer seat.
The funding will be used to build additional payments infrastructure and move into supporting other household services, Chexy said in a statement.
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Launched in 2023 by Akhvledziani, chief product officer Abtine Monavvari, and CTO Ben Gigone, Chexy enables tenants to make their monthly rental payments through their credit cards. The app allows users to easily split rent with roommates and earn cashback or rewards from their cards, while Chexy charges a fee which varies depending on payment method.
Previously, Chexy charged a fee so that rent payments affected users’ credit scores via Equifax reporting. However, alongside the funding announcement, Chexy said it has made that feature free-to-use in response to the federal government calling for rent payments to be calculated in credit scores.
Akhvledziani said in a statement that she, as a newcomer to Canada, had to navigate the challenges of the credit scoring system.
“Not having rent payments on the credit report is causing a significant information asymmetry between tenants and landlords, making the next apartment search hard in an incredibly competitive rental market,” Akhvledziani said. “Homeownership in Canada is already a pipe dream for many, so this is Chexy’s way of helping people move closer to achieving their dreams.”
Chexy isn’t the only company looking to incorporate credit into rent payments. In May 2018, RBC’s venture arm launched Get Digs, a digital service designed to assure landlords that they would receive their rental income each month, but abruptly shut it down in December 2020. In the United States, Wells Fargo is losing up to $10 million every month for its FinTech offering that allows tenants to pay rent with their credit card and receive reward points, The Wall Street Journal reported yesterday.
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Akhvledziani said that Chexy’s number-one priority this year is to update its payments infrastructure so that it can support more payment methods while staying true to its “no landlord onboarding” principle. Currently, Chexy can only pay landlords that accept e-transfers, which leaves out the “thousands of tenants” on Chexy’s waitlist, because their landlord prefers pre-authorized debit payments, bill pay, or even cheques.
The planned updates, which will give Chexy the ability to handle payments that are usually handled through a bank, will help the startup expand into supporting other home services such as utilities and insurance. The company is currently beta testing its feature Chexy Bundles, which will allow users to get a lower rate the more recommended utilities they combine into their rental payment package.
As for a potential mortgage offering, Akhvledziani said that’s a bit farther away.
“We need to ensure that we are working with the issuers to abide by their rules and enable mortgage payments on card,” Akhvledziani said. “It is definitely something we are starting to explore now, but the time frame is uncertain.”
Chexy raised $1.3 million in pre-seed funding alongside the launch of its platform last June. Akhvledziani said the funding enabled Chexy to grow fast over the past year, going from six employees supporting a couple hundred users, to 16 employees processing more than $10-million in rent every month.
Feature image courtesy Chexy.