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Not long ago, I wondered whether startups could help solve the U.S. housing crisis. Now there’s a new name in town: Airbnb spinout Samara, which just secured fresh funding. As for Dig, it got acquired not long after I started digging into its category: data security posture management. — Anna
The Airbnb playbook
With a shortage of at least 3.8 million dwellings, the U.S. housing crisis isn’t showing many signs of improvement. Comparing the situation to what it was just one year ago, VC firm Gutter Capital noted that it even worsened in some respects — chiefly, investment.
“[I]nvestor interest in the housing market, previously chilled, has frozen over,” managing partner James Gettinger wrote. “While rising interest rates were no match for the undersupply of housing, they were more than enough to scare away venture capital investors. We’ve been told by proptech funds that they only invest in software now. Regrettably, software can’t build homes.”
In contrast, Gutter Capital still stands by the thesis it phrased one year ago: “There is a historic opportunity today to invest in businesses that accelerate the development of housing in the United States.”
Gettinger put his money where his mouth was when Gutter Capital led a $3.5 million round of pre-seed financing for BuildCasa, a startup that helps homeowners build new housing in their backyard. Currently operating in California, it now has “over 40 units in the pipeline for development,” its co-founder Matt McBride recently wrote on LinkedIn.
California is very much at the forefront of the housing crisis. Granted, some tech workers left the Bay Area, but that doesn’t reflect the broader picture when it comes to housing in the state. “In the last ten years, California gained three times more people than it added housing units, resulting in only one dwelling for every 2.9 residents,” startup Samara wrote in a blog post.
That same blog post announced that Samara raised $41 million “to bring high quality ADUs to every backyard in California and beyond.” ADUs refer to accessory dwelling units, or more plainly, backyard homes.
The opportunity to build backyard homes on existing lots in high-demand areas hasn’t gone unnoticed: By stating its interest in facilitating ADU building, Samara joins the ranks of a startup like BuildCasa, but also others like Abodu, Mighty Buildings and United Dwelling.
However, Samara’s connection to Airbnb makes it particularly worth watching. While it’s now an independent company, it was founded in 2016 as a research and innovation team within Airbnb, whose co-founders are all involved in Samara in some form: Joe Gebbia is its co-founder, and Brian Chesky and Nate Blecharczyk participated in its Series A round, as did Airbnb.
Of course, there’s more to Samara than its Airbnb ties. Samara’s other co-founder, Mike McNamara, had become a VC after retiring from his role as CEO of Flex (formerly Flextronics), bringing on manufacturing expertise and more.
Samara’s Series A round goes well beyond Airbnb money, too: It was led by Joshua Kushner’s Thrive Capital, with participation from 8VC, General Catalyst, New Legacy, Ron Conway’s SV Angel and angel investors outside Airbnb, such as Michael Dell and Lewis Hamilton.
Still, the Airbnb connection is more than history. “We’re taking the same playbook that Airbnb brought to the travel space of ‘make it simple, make it easy for the consumer,’” Gebbia told Fortune. And Samara’s first product, prefab range Backyard, is an example of this.
“Building new homes and expanding existing ones is harder than it should be, slowed down by long permitting processes, high costs and the complexities of onsite construction. Prefabricated ADUs like Backyard enable us to add the flexible housing capacity California needs, giving homeowners space to house growing families, start new businesses, work from home or provide much needed new rental capacity and income,” McNamara said.
The focus on California doesn’t only owe to its housing crisis, but also to the measures the state is taking to counter it; on paper, the California HOME Act, or SB 9, makes it possible for homeowners to add a new dwelling on their lot. Now startups are hoping to make this a reality, and we’ll be watching.
Digging Dig
Earlier this year, I spent quite a bit of time trying to understand what seemed to be a fairly hot concept: data security posture management, or DSPM. My initial goal was to explain what seemed to be an increasingly important part of data and cloud security.
Per Gartner: “[DSPM] provides visibility as to where sensitive data is, who has access to that data, how it has been used and what the security posture of the data stored or application is.”
This led me to chat with investors at SignalFire, who backed Israeli startup Dig Security, and at Battery, which invested in the U.S.-based startup Normalyze. Both companies are closely associated with DSPM, and both had raised Series A rounds not long ago.
The article never panned out, but I can confirm the category is hot indeed: Dig just got acquired by Palo Alto Networks for an estimated $400 million. TechCrunch’s Ingrid Lunden had the scoop, confirmed a few weeks later.
Confirmed: Palo Alto Networks buys Dig Security, sources say for $400M
Beyond DSPM, what makes this deal even more interesting is that Palo Alto Networks isn’t buying just one Israeli startup, but also another one, Talon. Both deals were disclosed during the war between Israel and Hamas.
“To be clear,” Ingrid wrote, “this deal for Talon, along with the one for Dig, were very much already in the works before the surprise attack by Hamas. That they managed to close them during the turmoil is notable, but what remains to be seen are how M&A activities, along with funding, and business for startups overall, will develop as the conflict wages on.”
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