When it comes to visiting new cities, Airbnb changed the game for people who might have previously considered only hotels or guest houses: now, flexible alternatives in private homes, powered by a modern, digital interface for hosts and guests to connect with each other to book a stay, are a significant part of the mix for travellers.
A startup from Berlin called Habyt wants to do the same for people looking to stay in cities for a little longer — typically between six and nine months — living “nomad” lifestyles or taking advantage of more flexible work policies. Today, Habyt is announcing a Series C of €40 million ($42 million) to fuel those ambitions.
The size of this latest round is a healthy one — especially considering that startup funding remains constricted overall, and that the travel industry is still recovering compared to pre-Covid-19 pandemic levels of activity.
That’s partly due to Habyt’s growth — its platform now has 30,000 “units” (full apartments, as well as rooms in apartments) across some 50 cities, compared to 5,000 units in 18 cities only a year ago. And it’s partly due to progress in another kind of unit: unit economics. Habyt says that it is profitable already in several of its key markets (it has extensive properties across Asia and Europe, in cities like Berlin, Madrid, Hong Kong and Singapore), and it’s on track for full-company profitability in 2024.
As with Airbnb, Habyt’s focus is housing and the physical world, it takes a very tech approach to it: accommodation is listed online only; viewings are carried out virtually; transactions, including any contracts and document and identity verification, are all handled online.
“We are the only player in the co-living market that manages everything, end to end, via a tech platform,” said CEO and founder Luca Bovone in an interview. The funding will be used in part to continue enhancing that tech platform as well as to expand the business overall across Europe, Asia and North America.
The all-equity investment has a strong list of backers spanning the worlds of European and U.S. VC: Korelya Capital and Deutsche Invest co-led the round; and other new investors Exor Ventures, Endeavor Catalyst; as well as previous backers P101, ITALIA500-Azimut, HV Capital, Vorwerk Ventures, Norwest, Kinnevik, Burda Principal Investments, and Inveready also participated. (Other investors in the startup include Sequoia, Picus and Mitsubishi Estate.)
Habyt is not disclosing its valuation, but Bovone said that it’s definitely an up-round, confirming that its last valuation was $200 million. The total raised by the startup now stands at just under $100 million.
The gap in the market that Habyt is aiming to fill sits between short-term rentals of less than a month, and typically days or weeks; and long-term rentals where a tenant (not a guest!) signs a lease of a year or more to establish a home.
Bovone said that Habyt focuses on tenancies that typically last between six and nine months — a period that would become prohibitively expensive in a place that typically charges by the night; or simply wouldn’t be considered by a landlord looking for more stable tenants.
He calls this “the sweet spot of medium stays.”
Target customers include the estimated 35 million “digital nomads” globally as well as those who are either looking for places to buy or are holding off to see what happens with interest rates. Some 70% of its customers currently are international people who have had to relocate to other countries; and 30% were already citizens of the cities where they’re renting through Habyt.
This focus means that Habyt largely gets to evade the controversy that has hit companies like Airbnb and VRBO in the short-term rental market.
Critics have alleged that short-term lets bring a degree of churn, disruption and unpredictability into neighbourhoods and apartment buildings where residents might have gravitated specifically in search of stability; and in markets where housing is scarce, properties that might have been a part of long-term rental inventory have now been knocked out of the list as they are turned into Airbnb pads with considerably lower occupancy rates. That also has a knock on effect on local economies. In some markets, people continue to debate whether short-term rental growth should be capped.
But that is not to say that the co-living market is completely smooth sailing. Habyt has grown both organically and by way of acquisition, picking up Hmlet in Singapore in 2022 and New York-based Common Living earlier this year. Common, as it was more commonly known (haha), raised $150 million from big-name investors and reached a valuation of as much as $423 million, but it also drew some shockingly bad press before it was acquired. (Habyt has not disclosed how much it paid for Common earlier this year.)
Nor does it mean Habyt will not be in the habit of expanding into short-term stays in some markets. Earlier this year, the startup opened its first hotel, in Berlin, which it claims was booked up within days of opening.
While Airbnb got its start by tapping into the long tail of privately-owned properties to build out its inventory, Habyt has taken a somewhat different approach that feels closer to the hotel industry. Bovone said that its early focus was on private homeowners — similar to Airbnb — but to really scale the business, it has quickly moved into sourcing inventory from institutional property owners, with Habyt working with them to create a consistent experience. At the moment these are all in furnished accommodations.
“Habyt is solving the ever growing global problem of access to housing with a digital-first solution appealing to young local families and mobile professionals alike, while offering real estate developers and investors an innovative and compelling product,” said Franco Danesi, a partner at Korelya Capital and a board member at Habyt. “We believe in Habyt’s bold vision of redefining the world of flexible housing, and we are keen to support them on their journey by facilitating access to attractive geographies such as Asia.”