Toronto-based Hostaway has raised $1.9 million in seed funding as the company looks to tackle the evolving vacation rental industry.
The funding was led by Finland-based venture capital firm Vendep Capital, which focuses on the B2B software space.
“We were very impressed by Hostaway’s quick growth during the course of this year,” said Hannu Kytölä, general partner at Vendep Capital. “This success was achieved by building a seasoned team delivering world-class customer service on an easy-to-use channel management platform, which delivered what it promised: hassle-free growth for its customers.”
“What we want to make sure is that we are going to be, in five years, one of the biggest players in the vacation rental industry.”
Launched in 2015, Hostaway’s platform allows rental managers to manage properties in one platform. Speaking with BetaKit, CEO and co-founder Marcus Räder explained that property managers need to be on multiple platforms—such as Expedia and Airbnb—which means trying to manage data across several portals. Through Hostaway, managers can advertise properties, communicate with guests, and create reports to understand business reports across multiple channels.
The company’s co-founders hail from Finland, though the company is headquartered and building its team out of Toronto’s DMZ, participating in the hub’s sales accelerator. In 2016, the company received a $75,000 grant from the Finnish Funding Agency for Innovation as it prepared for launch.
The funding will be used for marketing, product development, and expanding its 30-person team—based in Toronto, Barcelona, Helsinki, Melbourne, and Kiev—by January 2019. Hostaway noted that its team is made up of nearly 20 nationalities speaking over 10 languages, an advantage for a product that they hope to build into a global market leader.
“When you manage 50 or 500 properties, it gets very complicated to manage all of that and make sure you have the right prices, to make sure all the properties are clean and make sure all the guests know how to check in, to make sure that the owners get reports on how much their payout is this month,” Räder said. “The average customer used to use spreadsheets to manage, but that’s time-consuming and prone to human error.”
Räder added that the increasing consolidation of the market means that more marketplaces are shutting down, and smaller property managers are disappearing or being acquired by bigger players. One of the most notable examples was Expedia’s acquisition of HomeAway in December 2015, when HomeAway was acquired for $3.9 billion USD. HomeAway owned several vacation rental websites like HomeAway.com, VRBO.com, VacationRentals.com, and BedandBreakfast.com.
“What we want to make sure is that we are going to be, in five years, one of the biggest players in the vacation rental industry, we have no other ambitions than that,” Räder said.