Startups have spent the last decade trying to offer every variation of Airbnb that they can imagine. But Ukio thinks it has found a way through the ever-growing tangle of housing rental competitors — and regulators — right as remote work becomes the norm.
It offers rentals of one month or longer, featuring a turnkey premium experience in prime city locations in partnership with local property owners. The initial results are promising.
The Barcelona, Spain-based company was founded early last year and has grown to more than 100 apartments between that city and Madrid while maintaining a 95% occupancy rate.
Today it is announcing a large-sized seed round of $9 million from top European investors, with plans to scale to more than 700 apartments across six continental capitals in 2022. Lisbon is the next city on the list, followed by London and Berlin.
Ukio’s guests so far are split nearly evenly between two use cases, according to co-founder and CEO Stanley Fourteau*. One half is composed of new long-term residents who have landed local jobs and will eventually move into permanent housing. So far, this group tends to stay six months or longer.
A longtime director at Airbnb, Fourteau says that the mainstreaming of remote and distributed work has also brought in a growing group of digital nomad types who are looking for something more than a short-term rental. This half of the user base tends to stay around two or three months, to date.
To indicate that market opportunity, he cited Gartner report showing the remote-worker demographic could grow to 31% of all workers by the end of this year. But TechCrunch readers might find that number a little conservative. Proptech investors who I surveyed for Extra Crunch in March, for example, described office space as being more of a luxury in the future, with more workers living wherever they wanted — places with fun “third spaces” for entertainment and community, like what many European cities are known for.
Ukio, which is Japanese for “living in the moment,” is hardly the only startup aiming for this changing demographic. A few prominent ones from a long list of them include Blueground, Sonder, Sentinel and Zeus (plus Airbnb’s long-term rental options). So what’s different here?
“Ukio rents, furnishes and manages properties to oversee the entire guest experience,” Fourteau explains. “Our vertically integrated approach allows us to professionalize supply for platforms such as Airbnb (a peer-to-peer marketplace), similarly to how global hotel chains professionalize supply for Booking.com.”
The idea originated from his time at Airbnb, where user demand for long-term rentals never really fit with the company’s platform model. “The core focus of [that] company is in strengthening their relationships with and growing their host community,” he says. If Airbnb were to build a vertically integrated rental operator like Ukio, “it would compete with their existing community and could compromise its relationship with them.”
Today, he says, the most desirable long-term rentals in a city get taken before they get posted on Airbnb or are snatched up from the platform well before demand is met. Ukio-operated apartments, on the other hand, “will be a part of that community for many years to come.”
Ukio’s relationship with property owners is another way of creating a moat around key locations, he believes. “We engage in 7-10-year lease contracts with full tenant management. These agreements optimize their returns, avoiding vacancy rates and reducing management costs. Ukio provides them guaranteed yields and offers a hassle-free solution. As a business, we now receive more inbound requests from landlords wanting to work with Ukio than targeted outreach, with a strong supply pipeline for growth in the next year.”
Here’s a more granular look at what he sees providing the differentiation long term, paraphrased for brevity: Ukio uses a 200-point process to choose potential apartments and only works with the owners of the best ones in prime locations. Many of these are single units, which allow for more of a mix spread across a city than startups like Sentral that use entire buildings. Each unit also gets a unique design, versus the templated approach of Blueground and some others. While many competitors are primarily platforms with hosts providing and managing their own units, Ukio has an internal team to manage all properties. It’s also starting out with a focus on Europe, whereas many of its most direct competitors like Zeus are focused on the U.S.
On the tech side, in addition to the supply acquisition tool, it uses a dynamic pricing model to help keep occupancy high, and an internal design system and catalogue to reduce installation and onboarding costs. Ukio’s product-focused co-founder, Stanley’s brother Jeremy, has a decade of experience from key roles at Zynga, EA, Headspace and most recently Knotel.
As a company whose core product is physical, Ukio faces risks of tightening local regulations as well as COVID-related restrictions. Fourteau (Stanley) acknowledged the issues but argued that Ukio’s particular model is better suited to cope because it is getting such heavy usage from long-term locals. The bigger question in this phase seems to be Ukio’s various well-funded competitors, who will no doubt tweak their models repeatedly to attract the remote workers of the future.
And so, this need for rapid scaling is the context for the large-sized seed round. It was led by French venture firm Breega with participation from Heartcore and Partech, and angels including Iñaki Berenguer, founder of Coverwallet, and Avi Meir, founder of Travelperk.
* Disclosure: I went to college with Stan nearly 20 years ago, but we’d lost touch a decade ago before he sent me this news.