Toronto proptech startup SingleKey has acquired San Francisco-based tenant screening tool Naborly in deal it hopes will unlock doors.
Naborly, which got its start in Toronto before moving south of the border, provides tenant credit and background screening services across Canada and the United States.
“They have one of the best solutions for tenant rating, in terms of technology, IP, [and] their AI.”
-Viler Lika, SingleKey
According to SingleKey, the acquisition of Naborly will give the startup “the first all-in-one management solution for Canadian homeowners with tenants.” The financial terms of the deal, which closed in October and stands to triple SingleKey’s user base, were not disclosed. According to SingleKey, the Naborly acquisiton will expand its user base from 20,000 to 60,000 landlords, and from 90,000 to 340,000 tenants using its technology.
“We were both direct competitors,” SingleKey founder and CEO Viler Lika told BetaKit in an interview. “We were able to grow quickly and acquire market share in this space. I think Naborly took a really good shot at solving this problem. They have one of the best solutions for tenant rating, in terms of technology, IP, [and] their AI.”
Naborly offers a screening tool that can measure a person’s credibility as a renter, using multiple data points, including a social media analysis, phone record search, and criminal record check, compiled into a single report.
Launched in 2016 by CEO Dylan Lenz, Naborly had raised a total of $13.5 million in funding prior to this deal, from a group of investors that includes First Round Capital‘s Bill Trenchard, Susa Ventures’ Chad Byers, Joe Montana’s Liquid 2, Village Global VC, Assurant Insurance, Third Prime, Toronto’s ScaleUp Ventures, and Y Combinator.
SingleKey, which was founded in 2017, describes itself as a software tool that helps landlords make more informed decisions when selecting tenants in order to effectively manage their risk. The startup enables homeowners to screen prospective tenants and run background checks, and offers a rent collection tool and rent guarantee product.
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“Our goal continues to be to take the risk out of renting for homeowners and their tenants,” said Lika. “The merging of our product, which has experienced 300 percent year-over-year growth since we launched it, with an industry pioneer like Naborly’s best-in-class screening data, technology, and AI provides a holistic solution to our half a million customers and over 1.5 million rental units nationwide.”
According to Lika, who declined to disclose specific figures, the deal was worth “a substantial amount,” and the CEO noted that SingleKey tried to make as many of Naborly’s investors and lenders whole as possible.
“It was an expensive deal for us, but at the same time the revenues coming in from that business will have a fast payback, so we’re pretty excited to get to work and transition the customers over and really start to drive some synergies and monetize the acquisition,” said Lika.
Lika noted that SingleKey has retained only a small portion of Naborly’s employees as part of the deal given the similarities between the two businesses.
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“We’ve been in market now for about half the time Naborly has,” said Lika. “We’ve been very lean and mean. We haven’t focused on raising capital—it’s been more about organically growing profitably and keeping costs low as we continue to scale, especially given the tough environment in the rental market, whether it’s COVID-19 or a potential recessionary period.”
SingleKey plans to onboard all existing Naborly customers to SingleKey at no cost and with no disruption of service. This transition has already begun. SingleKey plans to shut down the Naborly app by November 1 and move all users over to the SingleKey platform. According to SingleKey, users will be able to log into its app using their same Naborly logins, and find their past reports on SingleKey.
According to SingleKey, a smooth transition will be key in helping to reduce attrition given that the startup is shutting down all of Naborly’s tech and absorbing existing customers into the SingleKey customer service team.
“We’ve honed our technology over the past six years to provide our customers with the best, most comprehensive reports available to Canadian landlords, helping to take a lot of the stress and guesswork out of renting their properties,” said Lenz. “We’re thrilled that our customers will now be able to not have the highest chance of success when selecting tenants, but also have the security of guaranteed rent payments if a tenant defaults, or causes damage to their property.”
Feature image courtesy Pixabay. Photo by Oleksandr Pidvalnyi.