Prairie Village-based HomeRoom was selected as one of only 300 startups among 17,000 that applied for the highly competitive seed funder Y Combinator.
The residential real estate marketplace, which brings investors, tenants and homeowners together in a Silicon Valley-inspired online and mobile platform, received a $500,000 investment from the national accelerator.
This year was Y Combinator's lowest acceptance rate for startups and the second year HomeRoom had applied. The funding helped it close a $1 million pre-seed round to start the year.
“It’s really the best financing offer I've ever heard of,” HomeRoom CEO Johnny Wolff said. “I’m just really excited that it pushed us over the $1 million for our fundraising round, which is a big milestone. It's exciting to have that freedom as a company to invest in marketing, in our sales team and in technology.”
The Uplift Syndicate and The HO0 Fund, a syndicate focused on property tech, also helped HomeRoom reach the $1 million threshold.
“I think the market is excited about the traction we have about ... providing affordable housing for young adults,” Wolff said.
HomeRoom, which helps random roommates sign a lease together, has 140 co-living homes in more than 30 cities across seven major metro areas. The homes are owned by 85 investors, and the company plans to expand to more than 80 cities across 20 major metro areas this year.
The $1 million in pre-seed funding will help HomeRoom expand to more 1,000 homes and 6,000 tenants.
The last time a Kansas City-based startup was featured in a Y Combinator was in 2016 with Acre Designs LLC, a net-zero, environmentally conscious homebuilding startup.
Y Combinator increased its funding in 2022 from the original $125,000 to $500,000, divvying up a third of the funding for a post-money safe in return for 7% of the company and $375,000 for an uncapped safe with a Most Favored Nation provision, according to the Y Combinator website.
As part of this year's group of startups, HomeRoom will work with strategic partners in both the property technology industry and similar general tech industries such as Uber and Lyft.
“(There’s) people that have deep experience in property, but also people that have just taken companies in our exact stage to hyper-growth,” said Jordan Barnes, the company's vice president of brand and communications. “We have both deep expertise in our industry and people that know how to scale businesses like ours. It's a really good mix, and I'm super excited for their counsel through this next season for the company.”
Wolff said there are several similarities between Uber and Lyft and HomeRoom's platform. The investors are the drivers and tenants, in HomeRoom's case, are the passengers.
“We thought it was a really nice combination to work with them, and they've seen how this dynamic plays out and obviously had a lot of success. We want to be in every city in the United States just like Uber and Lyft are," he said.
Along with adding employees and tech, HomeRoom also wants to tap into new investor channels. Expanding to new cities will attract more investors, Wolff said.
“We just added Indianapolis, Pittsburgh and Tampa and are currently looking at Denver,” Wolff said. “The goal is to enable real estate investors to invest with confidence and anywhere in the United States in co-living or single family homes with HomeRoom.”
