Co-founders Steven Welles and Patrick Paul, as well as the entire team at Ikos Holdings Inc., said they did everything they could to keep the company running.
But pandemic-induced hardships in the rental and housing markets ultimately forced the Pittsburgh-based online platform for landlords and real estate owners to announce that it would be "winding down operations" come Dec. 31, according to a letter sent to company shareholders.
The news comes following several years of rapid growth for the company, first founded by CEO Welles and chief operating officer Paul in 2016.
In 2017, Ikos landed $850,000 in a seed financing round led by Birchmere Ventures of Pittsburgh. By 2018, the startup had operations running in Pittsburgh as well as in Cleveland and Columbus, Ohio; Baltimore, Maryland; Chicago; Milwaukee; and Nashville, Tennessee.
The company opened its Milwaukee office in 2018.
Pittsburgh-based Draper Triangle Ventures led a $4 million fundraising round for Ikos in 2019, a year that also saw the startup expand to Philadelphia, Boston and Washington, D.C.
"We basically started launching," Welles said. "I think right up until Covid, frankly, we were on a growth path of just opening markets, being able to grow the product, grow the team and I remember seeing, too, a clear line of sight of to how we can get to maybe 100 metros in the country and really fulfill what we set out to do."
At its peak, Ikos operated out of 10 cities and employed around 65 workers, not including the contractors it hired.
But then the pandemic had a drastic impact on the rental market, and in turn, Ikos as well. With a low turnover of people moving in and out of housing units owned by Ikos' clients, the company faced an income shortfall given that a significant portion of its revenue came from being able to bill its customers once Ikos had placed a new tenant in a customer's property.
Over the past six months of 2021, the company's payroll included just under 30 employees and it maintained its full suite of its operations — the online platform for real estate owners to find and fill apartments as well as the in-person showings of apartments to potential clients and the handling of their applications — out of four cities; Pittsburgh, Philadelphia, Baltimore and Washington, D.C.
It was also during this time that the company began looking to raise an additional $4 million to further support its expansion efforts, but those talks eventually fell through after Ikos said it made it to the final stages of funding approval with two real estate-oriented venture firms. Ikos then began having conversations with multiple companies that were interested in acquiring it, but those talks also came to an end without a deal as well.
"Ultimately, inventory was super tight, which means our revenue growth was limited, and then as we started to pivot to make changes to the business that we were ultimately planning to continue under, we just ran out of time to continue to execute and really to continue to build the momentum that we started," Welles said. "When it became clear that if we were going to somehow continue, it really wouldn't be in the way that we originally envisioned, continuing and growing everything, and we thought hard about a lot of potential options but ultimately came to the decision to wrap it up, which was tough. Very tough."
Welles said he was proud of the efforts his team made over the past few years, noting how impressed he was with their grit and graciousness since the company's founding. Paul declined to speak on the record for this story but expressed nearly identical sentiments to Welles'.
"I'm hoping people see (this news) and realize that there's a really talented group of people that have Ikos on their resumes," Welles said. "There are people who already landed somewhere, people who are looking and some people who just want to to take some time and heal a little bit and reflect. Everybody kind of poured their hearts into this…for me right now, the most important thing and the thing I'm 100% focused on is helping the team get to their next places, making sure that all the stakeholders involved know how much I and Pat appreciated them, making sure that communication gets out to everybody and just doing this the right way because it's hard enough anyway. And when I get through that, I think I'll have some time to pick my head up to figure out (what comes next)."
The region's largest seed-stage investment organization, Innovation Works, also contributed funding to the organization over the years, among others.
“Steven Welles and Patrick Paul are incredibly talented founders," Rich Lunak, president and CEO of IW, said in an email statement. "Prior to the pandemic, Ikos was one of the fastest growing startups in the Pittsburgh region. Despite the team’s valiant efforts to pivot their business model, the volatile real estate industry has remained impacted by COVID-19. Innovation Works is actively working with the company to find a home for their gifted team in other regional technology firms.”
