With a LaaS (Living as a Service) solution and an uncomplicated and flexible rental offer, with all fixed expenses included in the rent price, the Brazilian startup Tabas closed a $14 million (about BRL 80 million) Series A funding round.
The investment round consists of $6.6 million in equity, led by the U.S. proptech Blueground, which now has a seat on the Tabas’ board, and followed by Echo Capital, manager of Guilherme Weege, and Nelson Queiroz Tanure. And $7.3 million in debt from undisclosed investors.
Founded by Brazilian Leonardo Morgatto and Italian Simone Surdi, Tabas landed on the market in early 2020, weeks before the COVID-19 pandemic hit the world. Despite the uncertain scenario in its debut year, the startup ended 2021 with revenues of BRL 15 million and an average occupancy rate of 93%.
Morgatto and Surdi credit the good performance to Tabas’ business model, which promises to solve the problems of both landlords and tenants.
Tabas offers flexible rentals for medium and long-term stays. Flexibility, however, is for the final client, for those who are going to rent a place and don’t want to commit to a long-term contract, and other practices common to the real estate market. So, Tabas offers rentals from one month, with the monthly costs of the apartment included (such as IPTU (property tax), condominium, electricity, water, gas and internet).
The deal with the property owners comes on more stable terms: Tabas signs long-term contracts (up to six years) with the landlords and, during this period, refurbishes and furnishes the properties according to the “Tabas standard of design and comfort”. The startup then manages the rents until the end of the contract and is responsible for the maintenance of the apartments and for paying the rent to the owners – whether the place is occupied or not.
“The Brazilian real estate market has many cases of properties that were acquired to be a source of extra income, but time goes by, the property doesn’t get proper upkeep, and in the end, there are places in excellent locations but in terrible conditions. This is bad for the landlord and the tenant. We solve this issue. For landlords, we are an ideal, stable solution, while for tenants, we offer a place to feel at home for how long they want,” Morgatto explained.
Tabas currently operates in São Paulo and Rio de Janeiro cities and manages a portfolio of 360 handpicked apartments. Most of the portfolio is made up of properties with two or more bedrooms, and rents range from BRL 5,000 to BRL 40,000.
The future: new neighborhoods and cities, and financial products
The newly raised capital will be shared. The debt funding will be used to renovate and furnish the apartments, “to transform them into a viable solution for Tabas’ standard,” according to Morgatto.
The equity funding will be used to accelerate the expansion to other neighborhoods and cities, starting with Brasilia in the first quarter, and expand the portfolio, reaching 1,200 apartments by the end of 2022.
In addition, Tabas is considering new verticals: the launch of financial products focused on landlords, such as anticipation of receivables; and the launch of B2B solutions, to meet corporate demand for rentals.
According to the cofounders, the choice to close a round in debt was natural for the company. “This financing model fits with our business model. We have a real estate asset that we refurbish. It doesn’t make sense to use equity money with that kind of asset, whose value depreciates over time. Equity money is for investing in the technology and the operation, which appreciates in value. Not all startups have this possibility,” said Surdi.