Silicon Valley does not have a monopoly on all great, new ideas. This is the third post in a series called Out of the Valley where I highlight the whos, whats, whens, wheres, and whys of the most exciting and innovative companies located outside of Silicon Valley, and the talented entrepreneurs that lead them.
Today I am highlighting a company that is shifting the paradigm of home purchasing, Loftium.
WHO
Loftium was founded by Yifan Zhang and Adam Stelle. Yifan graduated Harvard with a BS in economics and has experience as an entrepreneur through her founding of GymPact, an app that incentivizes healthy activities through cash rewards. Adam Stelle is a graduate of the University of British Columbia and has extensive experience as a part of the startup ecosystem having been COO of Startup Weekend and Entrepreneur in Residence at Pioneer Square Labs.
WHAT
Loftium is a fascinating company that is disrupting the world of home financing. Loftium will pay the down payment on a new home or apartment in exchange for a share of the revenue produced by renting a spare room or sub-unit on Airbnb for 1-3 years. The important thing to note here is that it is a revenue share arrangement, as opposed to a loan. This means that the risk of any units not being rented out lies with Loftium instead of their customers.
WHEN
Loftium was founded in 2016. Loftium's first seed round closed in April 2017 and included investments from Draper Fisher Jurvetson and Founders' Co-op . DFJ and Founders' Co-op later re-upped in a $2.5 million September 2017 round. They were joined by NextView Partners.
WHERE
Loftium is based in Seattle, Washington. Seattle has always been a tech hotbed, serving as home to behemoths like Amazon and Microsoft. Seattle ranked 2nd on CBRE's 2017 report of the country's top tech cities. Seattle has a reputation of being more of a "corporate" town than a startup haven like Silicon Valley, but as rents skyrocket ever higher in the Bay Area, tech talent and capital are migrating to the significantly cheaper Seattle area. According to a 2017 report by Glassdoor, Seattle had the greatest increase in portion of software jobs of any major city. Look for startups to continue to pop up in the Emerald City as companies tach advantage of its close, but not too close, proximity to the bay area.
WHY
Loftium fascinates me for two main reasons. First, it takes advantage of a huge demographic trend of millennials buying homes. Home ownership has risen to its highest level in years spurred on by the trend of millennials switching from renting to owning properties. Millennials are moving out of cities and into the suburbs in the search for affordable housing options. Loftium is perfectly positioned to take advantage, and even to help facilitate, this trend. Millennials will be on the looking for financial solutions to help them purchase a house and will have much more comfort around the arrangement of renting out a spare room through Airbnb.
Loftium is also interesting as one of the first of a wave of companies built upon the gig economy infrastructure. The gig economy was created in recent years by powerhouses like Uber, Lyft and Airbnb. Now we are seeing new companies enabled by this fundamental shift in how we think about work, transportation, and even our homes. Loftium would not have even been conceptually possible until Airbnb created the infrastructure, technology, and maybe most importantly, the social acceptability of renting your spare room out to a stranger. The gig economy is so compelling because of its ability to develop efficiencies by creating value out of assets that would otherwise go to waste. Have some free time on the weekends? You can drive Uber to make some extra cash. Have a spare unit that is only used for storage? Make it an income stream. Now companies like Loftium will be at the forefront of developing new paradigms built on top of the groundwork lain by companies like Airbnb before them.
Loftium is an innovative home financing solution that takes advantage of compelling demographic trends, while the company itself is at the forefront of the next layer of the gig economy.
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